It's only standard in the US and Canada, and no one's sure exactly why. It's about the size of an old quarto-sized sheet of paper, rounded to inches.
The standard in most of the world is 8.27" by 11.7" A4 paper, which is the size of A0 paper cut in half four times. A0 paper is a piece of paper with an area of 1 square metre and a length:width ratio of √2.
The full history of paper sizes is VERY capricious. Earliest sizes were quite variable and dependent on the papermaker's equipment. Later, governments dictated paper sizes. According to the American Forest & Paper Association since 1921 there were 2 government standards -- 8x10.5 and 8.5x11. President Reagan officially ended the government-only use of 8x10.5.