Among approaches to establish the importance of niche differentiation for species coexistence, the use of functional traits is attractive for its potential to suggest specific coexistence mechanisms. Recent studies have looked for trait patterns reflective of niche differentiation, building on a line of research with a deep but somewhat neglected history. We review the field from its foundation in limiting similarity theory in the 1960s to its resurgence in 2000s, and find the theory of trait patterning still in a stage of development. Elements still to be accounted for include environmental fluctuations, multidimensional niche space, transient dynamics, immigration, intraspecific variation, evolution and spatial scales. Recent empirical methods are better than early approaches, but still focus on patterning arising in simplistic models, and should rigorously link niche space with trait space, use informative null models, and adopt new metrics of pattern as theory develops. Because tests based on overly simplistic expectations of trait pattern are of little value, we argue that progress in the field requires theory development, which should entail exploring patterns across a set of conceptual and system‐specific models of competition along trait axes.