By tradition only one validly ordained bishop is sufficient for an valid episcopal ordination. However the presence of two more bishops this is seen as symbolical to the collegiality of the episcopate. Also it has a practical side to it, that is the church is undoubtedly assured of the validity of the ordination, as three bishops participateSee note 1 in an Ordination Which requires only one of them for validity. (New Commentary on the Code of Canon Law Canon 1012 - By John P. Beal)
Who decreed it and when?
The first decree regarding this is found in First Council of Nicæa - Canon 4:
It is by all means proper that a bishop should be appointed by all the bishops in the province; but should this be difficult, either on account of urgent necessity or because of distance, three at least should meet together, and the suffrages of the absent [bishops] also being given and communicated in writing, then the ordination should take place. But in every province the ratification of what is done should be left to the Metropolitan.
It is clear from the above text that it was a preexisting tradition that more than one bishop were present during an episcopal ordination. This practice continues to the present day.
There has been issues raised regarding the functionality of the Co-Consecrators.
Do the co-consecrators equally with the consecrator impart the sacrament to the candidate? Beyond the possibility of a doubt they are not witnesses only but co-operators. They are not mere witnesses to the fact that the consecration has taken place, but, by taking part in it, make themselves responsible for its taking place. It is not easy to see how the assistant bishops can be said to comply with the essentials of a sacramental administration. - Catholic Encyclopedia
In the current Rite of Ordination of a Bishop, all the bishop who are present participate in Laying on of Hands and during Prayer of Consecration say these words with the principal consecrator:
So now pour out upon this chosen one the power that is from you, the governing Spirit whom you gave to your beloved Son, Jesus Christ, the Spirit given by him to his holy apostles, who founded the Church in every place to be your temple for the unceasing glory and praise of your name.
These both satisfy the requirements of form and matter for the sacrament.