The word “closet” originally referred to a small private room, while “water” described the new flushing system. Together, “water closet” meant a small room containing a flush toilet.
Over time, terms like bathroom, restroom, toilet, and lavatory became more common, but WC remained widely used on signs because it is short and easily recognized by travelers.
Today, seeing “WC” usually simply means there is a toilet or restroom nearby. The term may sound old-fashioned, but it is still commonly used in airports, hotels, restaurants, and public places.