Looks like the convention was introduced as part of getopt in AT&T Unix System III (1980), though initially only in a handful of places. Then POSIX adopted it as standard for all utilities sometime later.

When --longopt was starting to get popular (in an ad-hoc way) for gnu and other utilities there was a poll (gnu.misc? late 90s?) whether to make it a gnu standard. The other choices were a +, or have commands not accept both bundled single letter options and longopts. There may have been other choices I've forgotten about.

The double-dash won. There were some people who were concerned that it might be confused with the end-of-args double dash.

Maybe that is true but they are certainly unambiguously parsed.