Hiding the 3 letter extension started with win95. Prior to this, Win3.1(1) had the file manager MDI interface, which showed extensions, and did not show pretty decorated icons.
Win95a was a radical departure from the program manager interface, and had all the pretty high color icon eye candy, and the start menu interface. It is also when they started hiding file types in the new Explorer filesystem browsing program. ( WinNT4 did have the start menu interface and all that jazz before win95, but did NOT hide extensions or folders by default, IIRC.) It pissed me off to no end, so I would always turn veiwing extensions back on-- which windows would always throw hands up and say "But you could hurt your computer seeing those!", which was a load of bull. This is the "Hide the scissors" approach, and does not teach people to be responsible.
It has been a consistent "Feature" of windows ever since, and Microsoft keeps moving the "No, TURN THE EXTENSIONS ON AND STOP HIDING SHIT!" option deeper and deeper into the labyrinth one has to walk to take the mittens off.