What are the differences between traditional and modern short stories?

Because this
question is broad, I will focus on one aspect of storytelling: voice. 

Firstly, it is important to talk about what we mean by "traditional" and
"modern." The modern period of literature is generally marked as beginning in the
1920s. However, there is something to Virginia Woolf's statement that the shift to modernity
began in 1910, for early examples of Modernist literature emerged before the
twenties. 

Two such examples of "modern" short story collections
include Edgar Lee Masters's Spoon River Anthology (1916) and Sherwood
Anderson's Winesburg, Ohio (1919). Both collections prioritize the use of a
first-person narrative voice, which became more common in Modernist literature. The subject
matter of the stories in both collections is personal and illuminates less savory aspects of
humanity through characters who seem real. Conversely, the Naturalist literature that had
preceded this had used environment and physical frailties to depict character. Masters's work
also helped to popularize the use of , as the narratives are not exactly stories but rather
poems that tell stories. Another aspect of modern literature is the blending of forms.

Later Modernist literature would also incorporate stream-of-consciousness and
free-indirect discourse. The stream-of-consciousness device is particularly evident in the works
of Virginia Woolf and James Joyce. In American literature, it was also used by William
Faulkner.

Stream-of-consciousness narratives incorporate the thoughts of the
characters in the narrative without the disruption of a narrator who lets us know that there has
been a shift from action to thought. The narrative may also jump from the mind of one character
and into another without any prior warning. In the nineteenth century, the use of voice was very
tightly controlled and the narrative voiceusually a third-person omniscient narratorwas
intrusive and sometimes told the reader what to think about a particular character. 

Free-indirect discourse is a literary device that occurs in prose narratives written in
the third-person omniscient voice. In the narrative, there is a sudden merging between the
narrators voice, which is otherwise distant and observant, and that of the character who is
speaking or having a thought. The narrator suddenly takes on the voice of the person or persons
speaking, instituting their dialects or speech patterns. This technique may cause a bit of
confusion for an inattentive reader, for the change can occur as soon as the next paragraph; in
the following paragraph, the narrator will restore the traditional third-person voice. Zora
Neale Hurston is an example of an author who used this device, particularly in her best-known
novel, Their Eyes Were Watching God.