The idea, though not the syntax, came from the installation of a TOPS-20 machine and some VMS machines on a lower floor. Our own homegrown OS (ITS) used control characters as commands and had DDT as a shell.
> In the beginning, in the first year or so of Unix, an ideal was formed for what a Unix program would be like…
Note that the approach you’re talking about came straight from the Multics of that era, though Multics already supported some short options at that time.
> None of this explains dd.
Because just as Unix in many ways copied Multics, the dd command copied IBM.