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Things actually started to change way back in the 1st decade of the 20th century as a result of the difficulties involved in mobilizing the state militia during the Spanish-American War.

I believe that was when the term 'National Guard' was first coined.

Despite that, when WWI started the National Guard was still somewhat idiosyncratic.

I read that some southern states still wore grey uniforms, for instance.

During WWI there were a number of amalgamations (The famous 'Rainbow Div' of Sgt York fame was composed of regiments from the N & S that reportedly had fought each other face-to-face  TWICE during the US Civil War) & the old regimental #'s dating back to the Civil War were replaced.

The process continued thru the '20's & '30's up to WWII when the 'Guard was again mobilized into federal service.

After WWII there was a big reorg.

The original plan was to make all CONUS US Army Corps consist of one active duty Div, one NG Div, & one Reserve Div but the conflict in Korea short-circuited that scheme.

Still, up to the late '60's, full-time NG personnel were still state employees but in the late '60's ('68 or '69, I believe) they became permanent, full-time, federal civil service employees, GS ratings and all. 

Even today each state gov commands his own state's 'Guard in peacetime with a full time 'Adjutant General' (two stars) directly under him but they haven't had unfettered control since sometime after WWII. Several times, when desegregation was in full swing, a southern states NG was 'federalized' (called into federal service).

p.s. One of my cousins (VietNam vet) was a full-time PA guardsman (retired O6), way back when, & one of my nephews is currently full-time in the MS NG (O4).