Originally Posted by Mchaz
Just speculating, but 700c is the closest metric sized rim to 27" (the old road standard).
The 27" size was developed very specifically to compete with 700C-wheeled bikes coming out of Europe. It was never at any time the "road standard," and only ever had widespread use in Britain and the USA. It eventually was displaced entirely by the older, still dominant, more diversified 700C standard.
My guess would be that the 700C size grew rapidly in acceptance and diversity of use in the 80's as it began to be accepted as the "large wheel" road standard in much of the Western world (and as racing designs and fashion began having more influence on what your everyday citizen was riding around). With a massive array of quality (and not so quality) 700C rims and tires of different widths becoming available, it became easier to spec bicycles to the desired price point by using 700C components.
This is just a theory, but it makes economic sense. By the way, the 650B size does survive in France, although it is definitely a drop in the bucket at this point. Hopefully, it will stay alive and gain popularity on both sides of the pond.