Production Design
Shot on Soundstages on 35 mm Technicolor Film
Directors very rarely shot on location in the 1930s. It cost a lot of money to fly anywhere back then, and besides it's wasn't like they could actually get to a magical land of Munchkins and talking trees via airplane. Every scene in the movie was shot in Hollywood, and those "outdoor" sequences were actually on a soundstage. (Look closely at the end of "Follow the Yellow Brick Road," and you'll see Garland dance right up to the painted backdrop on the wall.) That's pretty impressive considering how readily we accept the magic of it all, especially since they didn't have access to a single computer or artificial effect. (Take that, James Cameron!)
They performed another little bit of magic with the Technicolor process, which is what first allowed movies to be shown in color and which was quite the big to-do in 1939. Color tinting had existed since 1916 and Technicolor combined strips of film exposed under different colored filters to create a natural-looking palate. MGM loved using it, but it was very expensive, and cheaper movies still leaned heavily on black and white. Black-and-white movies stuck around until the mid-1960s before finally giving way to color. Now it's usually only used when the director wants to create a certain mood, evoke an older era, or as a nod to old movies. (Young Frankenstein is a great example.)
Even so, The Wizard of Oz found a way to one-up everyone by adding a twist. As everyone knows, the Kansas sequences are shot in black-and-white (or more accurately, in a monochrome sepia tone, which is kind of brown), while the Oz sequences use color.
That emphasizes how dull and boring Kansas is, and actually takes a page from Baum's book. "When Dorothy stood in the doorway and looked around," he wrote. "she could see nothing but the great gray prairie on every side." (1.2) He goes on about the grayness for quite some time, to better drive the point home. In contrast, the Oz sequences look even more spectacular, with the colors popping out all bright and vibrant wherever you look.
Granted, it raises the question of why Dorothy would ever want to go back to Kansas, but you have to admit it looks awesome. MGM always knew how to bring The Pretty, and with this one found a way to actually make an aesthetic and thematic point with Technicolor. Take another look, because few films have had the nerve to try that trick again.