My understanding is that actually there is no extra 20, it's precisely the length of an SMS. SMS is 160 characters, yes -- but in a 7-bit encoding (which is actually transmitted as a 7-bit encoding, not padded to octets like ASCII). That makes 140 bytes, which is what Twitter allows (or presumably originally allowed; I guess now longer characters still only count for 1 rather than multiple).
I don't think it did. Phone numbers are not included in the length of SMS messages - the destination is separate header data that is used in routing and not considered part of the message body. If I sent a message to a special "four digit" phone number or to a full 10-digit number, or even an international text message (not mms) with 40 digits in the address, the message length is not in any way shortened as a result. (Of course once a UDH is needed to deal with message concatenation, etc (which never really work, anyway) the limit is reduced to 153 characters - still longer than twitter's (lame) limit, in all cases.)
The whole "we need twenty characters to set aside the destination" was such a hollow rational that never made any sense. IIRC, it was revealed at some point that the 140 character message limit for tweets was basically the result of someone sitting down and doing a brief, informal testing of whatever they thought to be "the average sms message" and that's the number they ended up with.
> the destination is separate header data that is used in routing and not considered part of the message body
Right but how could Twitter have put data into the separate header in an SMS message? They can't do that. Hence the 140 character limit (the 160 hard maximum for them being able to put into a message and then minus 20 characters for commands).
Possible, but would make the user experience worse as then they couldn't reply to the text, if they wanted to respond (send a tweet back, etc.) they would have to go out of the message, find the Twitter number, open it up and reply there.
When my friends and I first started using Twitter, we basically used it as a group chat, similar to Hangouts/FB today.