When the IBM PC was first designed, it had no sound card, so the 'audible bell' character (ascii BEL or '\b') had to be linked to a tone emitted by the internal PC speaker. The designers chose C, and so a square-wave c emitted by a PC speaker is called a c-note.
The audible bell is typically used for indicating particular types of error conditions -- for instance, using backspace at the beginning of a line. It is occasionally abused by BASIC programmers, because of the 'BEEP' command (which emits a c-note). Audible bell characters are also printed during the BIOS setup routines on some older machines.
"I must have hung my vim session -- every key I press gives me a c note."