How to transform this infinite sum
Let $$a_{n}=\frac{x^{n}}{(1-x)(1-x^2)\cdots(1-x^{n})}$$ and $S_{n}=\sum_{i=0}^{n}a_i$. We want to show that $$ S_{n}=\frac{1}{(1-x)(1-x^2)\cdots(1-x^{n})}.$$ Clearly this is true for $n=1$, since $S_0=a_0=1$; and assuming it's true for $n=k$, we have $$ \begin{eqnarray} S_{k+1}&=&S_{k}+a_{k+1} \\ &=&\frac{1}{(1-x)\cdots(1-x^{k})}+\frac{x^{k+1}}{(1-x)\cdots(1-x^{k})(1-x^{k+1})} \\ &=&\frac{1-x^{k+1}}{(1-x)\cdots(1-x^{k})(1-x^{k+1})}+\frac{x^{k+1}}{(1-x)\cdots(1-x^{k})(1-x^{k+1})} \\ &=& \frac{1}{(1-x)(1-x^2)\cdots(1-x^{k+1})}, \end{eqnarray} $$ i.e., it's true for $n=k+1$. So it's true for all $n$ by induction. In particular, the partial products are equal to the partial sums, and $$ \sum_{i=0}^{\infty}\frac{x^{i}}{(1-x)(1-x^2)\cdots(1-x^{i})}=\prod_{i=1}^{\infty}\frac{1}{1-x^{i}}. $$
Combinatorical arguments are a nice way to manipulate generating functions (and vice-versa); we can make convergence a non-issue by working over formal polynomial series rings if need be.
The $q$-Pochhammer symbol is defined by $(a,q)_n:=(1-a)(1-aq)\cdots(1-aq^{n-1})$. The inverse of $(q,q)_n$ is a generating function for partitions of a certain type:
$$\frac{1}{(q,q)_n}=\frac{1}{1-q}\frac{1}{1-q^2}\cdots\frac{1}{1-q^n}$$
$$=\left(1+q+q^2+\cdots\right)\left(1+q^2+q^4+\cdots\right)\cdots\left(1+q^n+q^{2n}+\cdots\right).$$
The coefficient of $q^\ell$ above will be the number of ways it can be expressed as
$$q^\ell=q^{1\cdot j_1}q^{2\cdot j_2}\cdots q^{n\cdot j_n}$$
for nonnegative integers $j_i$, $1\le i\le n$, which are in bijective correspondence with partitions
$$(\underbrace{n,\cdots,n}_{j_n},\cdots,\underbrace{2,\cdots,2}_{j_2},\underbrace{1,\cdots,1}_{j_1})\vdash n.$$
These are precisely the integer partitions of $\ell$ with parts having size at most $n$.
The function $(a,q)_\infty^{-1}$ will also be a generating function:
$$\frac{1}{(a,q)_\infty}=\prod_{k\ge0}\frac{1}{1-aq^k}=\prod_{k=0}^\infty\left(1+aq^k+a^2q^{2k}+\cdots\right).$$
Evidently the coefficient of $a^nq^\ell$ above will be the number of ways to express it as
$$a^nq^\ell=a^{(j_0+j_1+j_2+\cdots)}(q^{0\cdot j_0}q^{1\cdot j_1}q^{2\cdot j_2}\cdots).$$
(Obviously almost all $j_i$s will be $0$ in these expressions.) These correspond to the partitions
$$(\cdots,\underbrace{3,\cdots,3}_{j_3},\underbrace{2,\cdots,2}_{j_2},\underbrace{1,\cdots,1}_{j_1})\vdash \ell.$$
These are precisely the integer partitions of $\ell$ having at most $n=\cdots+j_1+j_0$ parts. The partitions of $\ell$ into at most $n$ parts are in bijective correspondence with the partitions of $\ell$ into parts of size at most $n$ - the bijection is given by conjugating, or flipping the axes of, the Young diagrams that are associated to the partitions.) Thus the $q$-coefficient of $a^n$ in $(a,q)_\infty^{-1}$ is the generating function (in $q$) for partitions of integers $\ell$ into parts of size at most $n$, which we have already established is $(q,q)_n^{-1}$.
Therefore,
$$\frac{1}{(a,q)_\infty}=\sum_{n=0}^\infty\frac{a^n}{(q,q)_n}.$$
Plugging in $a=q$ gives your identity as the particular case
$$\frac{1}{(1-q)(1-q^2)(1-q^3)\cdots}=1+\sum_{n=1}^\infty\frac{q^n}{(1-q)(1-q^2)\cdots(1-q^n)}.$$
Start by taking the difference $$ \begin{align} \prod_{i=1}^k\frac1{1-x^i}-\prod_{i=1}^{k-1}\frac1{1-x^i} &=\left(\frac1{1-x^k}-1\right)\prod_{i=1}^{k-1}\frac1{1-x^i}\\ &=\frac{x^k}{1-x^k}\prod_{i=1}^{k-1}\frac1{1-x^i}\\ &=\frac{x^k}{\prod_{i=1}^k(1-x^i)}\tag{1} \end{align} $$ Summing both sides of $(1)$ yields $$ \begin{align} \prod_{i=1}^n\frac1{1-x^i}-1 &=\sum_{k=1}^n\left(\prod_{i=1}^k\frac1{1-x^i}-\prod_{i=1}^{k-1}\frac1{1-x^i}\right)\\ &=\sum_{k=1}^n\frac{x^k}{\prod_{i=1}^k(1-x^i)}\tag{2} \end{align} $$ This proves that $$ \prod_{i=1}^n\frac1{1-x^i}-1=\sum_{k=1}^n\frac{x^k}{\prod_{i=1}^k(1-x^i)}\tag{3} $$ Equation $(3)$ says that the product and sum in the question differ by $1$, which agrees with computation when $x=0$. Noting that the term for $k=0$ on the right side of $(3)$ is $1$, we get $$ \prod_{i=1}^n\frac1{1-x^i}=\sum_{k=0}^n\frac{x^k}{\prod_{i=1}^k(1-x^i)}\tag{4} $$