"The future ain't what it used to be."

Where did people get the idea of monsters

I think people are mostly animal, in that we are driven mostly by our basic animal urges (eat, sleep, drink, mate, not get eaten or otherwise killed). There is a small portion of our psyche that allows us to resist acting on those urges, based on knowledge or reason (based on previous experience/conditioning), and act in spite of those urges or fears.

The majority of actions taken by people are because of those basic urges/fears or associations with those fears/urges. Association is why we like things, love things and fear things.

Possibly the most deep drive we have is to not get killed or eaten, or in some cases, for our offspring not to get killed or eaten. This drive can negate the desire to eat or mate. This fear goes back to the origins of cellular life, when some organisms would survive by consuming and breaking down other organisms. Assuming there was ever such a time, the creatures that would survive best would avoid getting eaten. A part of avoiding such a fate involves recognizing things that eat you, as opposed to things that don't.

People now know that there are things that can eat or try to eat us: things like bears, mosquitos, sharks, rats. Some people fear these things. As an example, I can't stand sharks. Never met one, but somehow that type of organism has been singled out as a source of fear for me. Some fear rats, others fear dogs.

Some of the common traits of dangerous, carnivorous organisms are fairly well ingrained in us. Big teeth, sharp claws, physical size, and other things that help things eat us. Monsters are things created by a mind under the influence of fear. We already have fear associated with big, hungry whatevers. If someone is walking in a dark forest, they probably are already nervous, since their ability to detect predators is considerably lessened. If they were to hear a noise behind them, they might get scared, because the thing that is behind them might be a predator. It probably isn't, but this fear is much deeper than reason or analytical knowledge. They might not run, if their mind can tell them that it's unlikely to be a predator, and they might believe that, but the fear will still be there. They'll start imagining a predator creature, and they might think of a bear, but invariably, the fear will distort the picture, and the bear will be huge, with long teeth and whatnot.

In general, I'd say, monsters are creations of an over-active mind under the influence of mortal fear. And since this is a fear that we all share, stories of these "great big, hungry beasts in the forest" will probably spread and people will stop going into the forest, out of fear that the story is true. You can imagine the likely reasons that all the classic monsters are there...
The bogeyman and other such creatures live in your bedroom, in the closet or under the bed. In our civilized societies, our bedroom is the place where we probably spend most of our time in the dark. The fear of the dark is closely associated with the fear of predators, since in darkness is when we are more vulnerable. We are also vulnerable in water, since we are not, by nature, aquatic things. Hence, things like Jaws, Loch Ness (maybe), sea serpents. It goes on and on.

Basically, I think monsters are creations of the mind under great fear. They are symbols of our strong urge not to become a meal for something.

This is but one possibility, and I'm not saying these monsters don't really exist. They might. They probably don't, but the still might. And even if they aren't real, the fear is. When in a dubious situation, you just have to ask yourself, "This thing I fear probably isn't real, but is it worth the risk?" I could provide just as logical an argument for God instilling in us the fear of creatures that might eat us, or that might be tied into Satan.
the idea of "monsters" were created by parents as a means to satisfy and entertain children (due to people young or old love being scared, its human to WANT to be scared), personally i believe every child should have a period in his/her life where he/she is afraid of either ghosts, monsters or vampires because without that a child doesn't know when he/she is turning into a man/woman when they let go of those make-believe fears.
It's an psychological response to the unknown.

It's dark under the bed.
There could be something hiding in the dark
What if there is something in the dark under the bed?
You know, I think there might be something under the bed!

The human mind is wired to ask questions-so when your mind has a question that no one can answer satisfactorily("There isn't a monster there now, but there might be tomorrow!"), the subconscious comes up with an answer for itself.