An experiment found that the brain uses one set of neural circuits to identify the numbers 1–4; these circuits are very specific to their own numbers. A separate set of circuits respond to the numbers 5–9; these are less precise, and are activated by adjacent numbers.
For this reason, it is easier to determine when there are four things than to determine there are five things.



This has been part of IQ tests for a while: the vast majority of people can hold to 4 items without a problem, some people struggle with that, some people can hold to 5, 6, 7 or rarely more objects without a problem.
It’s also why phone numbers in most places started as 5 digit numbers, then as “area code + 7”, and now that we use smartphone contact lists to save them, they’ve gone to full “country code + 9 + extension”. There was also an interesting movement opposing the changes: https://www.mentalfloss.com/article/61116/why-did-old-phone-numbers-start-letters
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I don’t think that’s why, not least because this is a recent discovery. The reason is, presumably, because 26+ keys are difficult to fit on a small but still usable keyboard.
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Yes. And they had letters grouped with the numbers because 26+ keys is a lot to fit on a small but still usable keyboard (or dial, originally).