Post by Steven Bellovin on how it was settled that 8 bits make a byte.
https://www.cs.columbia.edu/~smb/blog/2023-03/2023-03-07.html
[O]ne of the goals of the [IBM S/]360s was to have a single unified architecture that could do both scientific and commerical computing. There was still the need to support those old BCD databases, whether they were still on punch cards or had migrated to magetic tape, and there was still the need to support decimal arithmetic. The basic design was for a machine that could support memory-to-register arithmetic for scientifc work and general utlity computing, and storage-to-storage decimal arithemtic for commercial computing. This clearly implied a hybrid byte/word architecture. But how big should bytes be? One faction favored 6-bit bytes and either 24-bit or 36-bit words; another favored 8-bit bytes and 32-bit words. Ultimately, Brooks made the call: 8-bit bytes permitted lower-case letters, which he foresaw would become important to permit character processing. (Aside: Brooks, apart from being a mensch, was a brilliant man. It’s sobering to realize that he was appointed to head the S/360 design project, a bet-the-compay effort by IBM, when he was just 30 years old, and this was just after his previous project, the 8000 series of scientific computers, was canceled. I wasn’t even out of grad school when I was 30!)