I'm curious as to the first implementation of this. I sat down and solved this nuisance of a problem in 2008-2009, for as3isolib. I later found a thesis by Ernir Erlingsson from around the same time period, but with a bit of a different data structure holding the objects to sort. I'm not aware of any "classic" games that do a true sort of isometric objects.
The vast majority of actual 2d isometric games use a very naive grid walking, with uniform tile sized elements. If everything moving is limited to 1 plane, then varying square footprint tiles can be used with a simple sort. However, the linked page is the "true" solution to isometric sorting, allowing any size axis-aligned rectangular solid to exist in any non-interpenetrating location in 3-space and sort correctly.
The vast majority of actual 2d isometric games use a very naive grid walking, with uniform tile sized elements. If everything moving is limited to 1 plane, then varying square footprint tiles can be used with a simple sort. However, the linked page is the "true" solution to isometric sorting, allowing any size axis-aligned rectangular solid to exist in any non-interpenetrating location in 3-space and sort correctly.