80 characters was based on 10 characters per inch on standard typrwriters combined with 8 1/2" wide paper and the fact that you needed margins of ~1/4" to avoid problems with trying to type up to the edge of the paper.
When teletypes were built, they used the same print mechanisms and so had the same limits.
When terminals were built, they mimicked the printed stuff (so that you could see everything that you could see on the paper, and it was a waste to have anything wider, since the people who were still using paper wouldn't be able to see it)
IBM punch cards were 80 columns to match the paper as well.
The problem is none of these are good reasons any longer.
As for the ideal column width to read, go do some research on why newspapers use such narrow columns, the ideal width for reading is surprisingly narrow, and NOT 66 characters.
a paperback book is about the outer edge of what a good width is (no matter what the font size)