From what I remember (and I have no clue from where, so don’t trust me too much), cyanobacteria evolved to squirt out oxygen as a method of killing off their competition.
The oxygen they put out was used to poison competing bacteria to death.
Similar to how modern day snakes are immune to their own venom, cyanobacteria were at least partially immune to their own “poison”, oxygen.
As for how it happened, I’m not sure, but most kinds of things like this happen because an organism starts excreting waste, then they evolve to resist their waste a bit, which lets them use the waste to ward off competition, so the waste gets more toxic, so they evolve to be even more immune, evolve to make their waste even more toxic, and so on.
Again, this is all coming from a very vague memory from years ago, so don’t trust me too much.
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