It all stems from Microsoft’s relationship with IBM.  For DOS 1.0, DOS only supported floppy disks.

Many of the DOS utilities (except for command.com) were written by IBM, and they used the “/” character as the “switch” character for their utilities (the “switch” character is the character that’s used to distinguish command line switches – on *nix, it’s the “-” character, on most DEC operating systems (including VMS, the DECSystem-20 and DECSystem-10), it’s the “/” character” (note: I’m grey on whether the “/” character came from IBM or from Microsoft – several of the original MS-DOS developers were old-hand DEC-20 developers, so it’s possible that they carried it forward from their DEC background).

[Via Larry Osterman’s WebLog]