It helps to keep track and easily communicate what’s being discussed. Take the Abrams tank, the M1 tank, for example. You have the original M1 tank, then a new variant M1A1, and then M1A2. In between where were also SEP’s, System Enhancement Packages, so if someone asked about an M1A1SEPv2 that tells you a lot about what you’re dealing with.
Tl;dr It’s a way to encode lots of information into a short, easy to remember code. A huge amount of military acronymage, jargon, and other language comes down to the need for things to be quick to remember, hard to forget, and easy to shout.
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