Only the young folks ask.

Those who’ve been using computers for more than a couple of decades will know this tale. I got asked the other day, so I thought I’d capture my response for posterity.
It’s a decades-long story.
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Why C:?
Back in the day, computers used “A:” and “B:” to name floppy disk drives. When hard drives arrived, they became “C:” because floppies still existed. Even though floppy drives are obsolete now, “C:” stuck as the default drive letter since so much software assumes it. “A:” and “B:” remain unused but assignable.
Disks used to be floppy
The existence of a “hard” disk implies the existence of a “soft” disk, right? And indeed, the first disks used with PCs were flexible disks in a protective case known as floppy disks.

The most common capacity was 360KB — that’s kilobytes. (It would take dozens of these to hold a single high-resolution image today.) Subsequent floppy disks were smaller physically, though they had greater capacity.

Even though they were encased in a protective shell, the media inside was the same floppy magnetic material.
PCs used to have floppy drives
The original personal computer, the IBM PC, had at least one and usually two drives into which floppy disks could be inserted.

At the time, floppy drives were the only storage available.
These two drives were designated “A:” and “B:” respectively.
Along comes the hard drive (and Windows)
Even the largest-capacity floppy disk was no match for the hard drive. The smallest initial hard drive — 10 megabytes (not quite one hi-res photo yet) — was at the time a huge amount of space.
The floppy disk drives “A:” and “B:” remained. The new hard drive became drive “C:”, the third drive in the system.
Floppies more or less stagnated in size, but hard disks continued to grow. Soon enough, the floppy disks were more of an afterthought, and the hard disk took on the role of primary storage device.
When Windows and other larger operating systems came along, they installed to the first hard disk because they needed the room. Drive “C:” became the system drive.
So long to the floppies
Current machines no longer have floppy drives. For a variety of reasons (their small size and the appearance of other media, such as CDs, DVDs, USB sticks, and more), they’ve outlived their usefulness.
But the hard disk remains, and it remains drive “C:”.
Here’s the catch: even though floppies are long gone and drives “A:” and “B:” are no longer in use, drive “C:” remains the system drive. It’s baked into too much software that’s made that assumption over many years. To suddenly attempt to, say, call it drive “A:” would have dire consequences for any software that could never conceive of it being anything other than “C:”.
So “C:” it remains, even if it’s the only disk drive on your machine.
The return of “A:” and “B:”
There’s nothing special about “A:” and “B:”. You can use them if you like. For example, using the Windows Disk Management tool, you can assign them to represent existing drives.

Since drives can have only one letter at a time, you may need to un-assign an existing letter to re-assign it to “A:” or “B:”. Don’t try to re-assign “C:”. If it works at all (it shouldn’t), it’s a recipe for disaster — if not immediately, then on your next reboot.
Do this
So that’s why we start with “C:”. If you’re running low on drive letters for some reason, you can always bring “A:” and “B:” out of retirement.
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It’s amazing to think of all the stuff we did and all the data we saved with floppy drives. Windows 3.1 came on a couple of 3.5″ floppies. Even my earliest version of MS Office was on floppies. That would be impossible today. My first hard drive was 256 MB, if I remember correctly. This laptop’s hard drive is 500 GB (2,000 times larger!). We played computer games, used Word, Excel, and PowerPoint, surfed the internet, emailed people around the world on so much less than we do today. I’m sometimes nostalgic when I see how much data has to be backed up today compared to yesteryear.
Remember when Bill Gates said that no one would need more than 640K of RAM?
There’s no evidence he ever said that. It’s a pretty persistent myth.
https://skeptics.stackexchange.com/questions/2863/did-bill-gates-say-640k-ought-to-be-enough-for-everyone
If you look at the floppy drive ribbon cable, you’ll notice a twist for some wires. That twist determines if it’s drive A or B.
Interesting. I used 8″ floppies long before PCs were introduced and I never knew this.