I don't know if that was really a "decision" or an unfortunate compromise. DOS inherited /foo style command line parameters from CP/M, and DOS 1 didn't have a hierarchical file system, so there was no conflict with the path delimiter character UNIX was using. When DOS 2 introduced directories (and brought over the cd, md, rd, etc. commands from UNIX) suddenly we had to choose between massively breaking backwards compatibility or using something else, like \, as a delimiter.