Answer: I really love this kind of question. You're asking something fundamental. And the answer is not immediately obvious, either. This is the musical equivalent of asking where the universe came from.

It's hard to avoid all technical talk in making an answer. Let's try, with an attempt to explain a few terms as we go. But there are going to be a lot of words.

The basic elements of music are not arbitrary, but result from the nature of vibrating strings or columns of air. Musical tones are those that have a recognizable pitch, which means that the sound wave repeats a pattern rather than changing constantly. If you look at a graph of the sound wave produced by, say, a sneeze, you'll see an irregular and unique jumble. Look at the graph of a musical sound and you'll see some kind of shape that repeats over and over. If it repeats quickly we hear a high tone, if slowly we hear a low one. And the shape of the repeating wave gives a different type of sound: a relatively smooth wave for a flute; a rougher one for a violin.

In that complex sound that makes up a single musical tone there will actually be found a number of pitches combined. There will be a tone that corresponds to the main shape, one that is twice as fast, which is an octave higher, one that is three times as fast, which is a "fifth" above that, and so on. And when you play two musical tones together that are tuned just right, some of these other waves, called "partials," will correspond and will reinforce each other so that these combinations seem particularly important. Take two pitches that at first have no apparent relation to each other, gradually change one, and at certain points they will suddenly come into a kind of agreement that is quite audible: that is the effect of the overlapping partials.

There's a more technical discussion of this in the appendix of Exploring Theory, but basically it means that the ear will hear a noticeable agreement between tones that are an octave apart, or a fifth apart, and to a lesser degree to notes that are a fourth or a major third apart, etc. Those are natural stopping places when finding new notes above a starting note, whether you're using a vibrating string or air in a pipe.

Over time cultures throughout the world found these natural stopping places. And people could tell that pitches an octave apart seemed like the same thing but higher, so musical scales were formed by finding other notes between the octaves. Just about every musical culture discovered the fifth, like C to G, and that meant they knew the fourth (the same thing turned upside-down). The major third (like C to E) was another stopping place.. Depending on the type of music people were interested in, they either stopped at a simple scale like the major pentatonic (example: C,D,E,G,A) or they went on to fill in other notes.

The tradition from which western music derives began with filling in the most obvious stopping places in one octave. And if you go by that process it's easy to end up with seven, but no more. The next pitch is called the octave because it's the eighth note (just as an octopus has eight legs). More than a thousand years ago the letters of the Roman alphabet were adopted to refer to these, and since there were only seven the letters ran A, B, C, D, E, F, G. That gets to the octave, where we hear what sounds like the same thing again, so it makes sense to repeat (though some early writers did use more letters instead of repeating).

That's why the piano has white keys that form a scale: the first keyboards had only those white keys. More keys (the black keys) were later added to fill in half steps where possible, so that the same melody could be played starting on different notes.

The trouble with trying to answer a question like that in simple terms is that I couldn't stick to being entirely simple, and yet had to leave out a lot of important stuff. But maybe this will do the trick. Really, music is not that technical anyway. It's not calculus; it's just arithmetic. Put another way: this is something I can talk about, but don't ask me about the origins of the universe.

(For further reference, see question 65, and, more entertainingly, question 35.)