Because they are impressionable tossers, and it's always amusing to see such people impressed by something that isn't, in fact, impressive. Especially when it's not true.
Its just students trying to be trendy and something that has ridiculously caught on. Makes me cringe, as do people who call Chichester "Chi" and Eastbourne "The Bourne"
I started to use the term some time between 1998-2001, yes, while I was at university. I borrowed it from American's who referred to Chicago as C-town. In my defense I have only ever used it as in in-joke with my friends (who aren't from B-town).