Greg's answer is correct...
The term originated because the first toilet facilities on boats werenothing more than holes in the hull in the bow of the boat--which wasknown as the "head of the ship"--where they could be well below decksand where the bow wake could wash it away from the hull. On smallerships, if the seas were rough, users often got their bottoms (and a lotmore) washed by waves that came up through the holes...which might nothave been too bad an experience in the warmer latitudes, but no fun atall in the icy waters of say, the North Atlantic! Like many otherterms, the name "head" continued to refer to the toilet compartment evenafter it became no longer necessary to put it in the head of the ship.Although the term "head" traditionally also applies to the applianceitself as well as the compartment in which it's located, an increasingnumber of mfrs in recent years have started calling the appliance a marinetoilet...prob'ly as a concession to today's boat buying public, most ofwhom don't really want a boat, they want a floating condo. (And it'sbecause the average person doesn't have a clue what the real definitionof the word "saloon" is that the industry began to call the part of avessel traditionally known as a "saloon" a "salon"...but that's another subject). However, I doubt the day will ever come when anyone but a landlubber will refer to a boat's head as a "bathroom." At least I hope not!