*Generally* (but not always) in Japanese martial arts, the "do" forms are those used to improve the self, while the "jutsu" forms concentrate on teaching the techniques of war.
The art of winning real fights with real swords is kenjutsu. The goal of kenjutsu is victory over opponents; the goal of kendo is to improve oneself through the study of the sword. Kendo also has a strong sporting aspect with big tournaments avidly followed by the Japanese public. Thus kendo could be considered the philosophical/sporting aspect of Japanese swordsmanship.
In terms of learning to fight with a sword, kenjutsu has a more complete curriculum. Kendo of necessity limits the range of techniques and targets. Kendoka generally use shinai, which allow techniques which do not work with real swords. Kenjutsu practitioners do not usually use shinai in training, preferring to use bokken (wooden swords) or katana (steel swords) in order to preserve the cutting techniques of real sword fighting. Kenjutsu training largely consists of practising cutting technique and performing partner kata.
In some ryu, there is contact, which usually happens in a controlled manner within a partner kata. Some of the ryu use protective equipment, such as the gloves and head padding of the Maniwa Nen Ryu. Others, Shinkage Ryu in particular, use a fukuro shinai which is made of bamboo split into many pieces at the end and completely covered with leather.
The earliest swords known to exist in Japan were of Chinese style and origin and date to the 2nd century BC. These ancient swords are referred to as ken, the Japanese pronunciation of the Chinese ideogram for sword or knife. From this term comes kendo, way of the sword, and kenjutsu, art of the sword.
Japanese sword technology began to outstrip the continental blades around 700 AD, with the advent of the first curved swords. Japanese historians refer to three stages of swordsmanship in ancient times - joko-ryu, chuko-ryu and shinto-ryu (ancient, middle and new styles).
One of two people are credited with the founding of kenjutsu, the synthesis of the ancient styles. The Kojiki and the Nihon-shoki (the 2 main references for ancient Japanese history) refer to Choisai Iizasa. Other historians refer to Kumimatsu no Mahito, a famous swordsman whose style is fabled to be the Kashima no tachi or Kashima Shrine style, which continues to this day.
Reference to the use of bokken (wooden sword) for fighting and training date back to 400 AD. This was followed by tachikaki, the art of drawing the sword. From this various ryus, or styles, developed. Once a fencing master became famous, he would form a ryu to give his name to the particular technique he had developed. Tachikaki developed into tachiuchi (match with swords) by the 8th century, after which there was slow development in kenjutsu.
In the 14th century, kenjutsu became popular once more. dojos began to be established to teach kenjutsu and perpetuate ryu. Around that time, Kagehisa Ittosai Ito achieved a reputation for peerless swordsmanship and deep-thinking philosophy. He named himself Ittosai (one sword man) and founded Itto-ryu, the one sword school. It still exists today and strongly influences modern kendo.
In the mid-18th century, Chuto Nakanishi developed the shinai (bamboo sword) and the kote (gloves). The do (chestplate) and men (helmet) followed, and by the end of the century, the practice armour and weapons had been refined into more or less the form they are used today. The new equipment required a new set of rules for the dojo, and the new style of fencing became known as kendo.
In 1871 the Japanese government made kendo compulsory training in schools and emphasis was placed on the mental, moral and physical value of training in an ancient martial art. Kendo was slowly becoming a sport. When the government banned the public wearing of swords in 1878, kenjutsu was barely able to survive. The Japanese police are credited with much of the effort in keeping swordsmanship alive during this period.
In 1909, the first college kendo federation was formed, followed by the Zen-Nippon Kendo Renmei (ZNKR, All-Japan Kendo Federation) in 1928. This federation, along with the Zen-Nippon Iaido Renmei (ZNIR, All-Japan Iaido Federation), govern kendo and iaido today.