When I first started doing rag quilts and found out about charm squares, I wondered why they were called "charm" squares. Yes, the assortment was kind of charming, but I knew there had to be another reason. That's when I found out about charm quilts.
People started making them back in the 19th century. I don't think anyone knows exactly how it got started, but women were making quilts that had no two squares/patches cut from the same fabric. It sounds like a great challenge to me since some of these quilts have a hundred or more pieces. Sometimes they were called "beggar quilts", presumably because women would beg fabric from their friends and family to make these quilts. If you ever have the privilege of seeing one of these quilts, take time to look and see if the maker included a surprise - a duplicate of one of the fabrics. Kind of like an old timey "Where's Waldo?"
Charm quilts were first made around 1870 and continued until around the turn of the century. They were made again in the 1930's and 1940's.
Today, charm squares/packs come from a fabric manufacturer and include a square of fabric from each material in a fabric line or collection. Usually these are 5" squares. The packs normally range from 25 to 50 squares. Recently fabric companies have been making "layer cakes" which are like charm packs, but the squares are 10" instead of 5".
If you need strips of fabric for your quilting, you can also find "jelly rolls" - 2.5" strips - and the newer "honey buns" - 1.5" strips - both in the same fabric assortments as the charm packs. The biggest manufacturer of these handy items is MODA, but you can also find them put together by individuals in online stores like Ebay and Etsy. Some quilt fabric stores do their own, too.
For those of you who like to quilt, either the traditional or the raggy, these packages of precut fabric can be a great timesaver.
For a more detailed and well-written history of charm quilts check out the article by quilt maker, collector and historian, Laurette Carroll, at http://www.fabrics.net/charmQuilts.asp