Why is a C Harp Used to Play in G?....The answer is simple.
Today most players do not play the harmonica the way it was originally designed to be played!

Keys and Positions
Although it is possible to play in many keys of music on any one harmonica by using various positions, most players use only the first two positions, Straight Harp and Cross Harp.

The Major diatonic harmonica was originally designed for playing simple folk music of the nineteenth century and its notation layout was adequate for that purpose.

The original style of playing, known as Straight Harp, is suitable for playing simple melodies, folk music and various other types of music that call for exact melody lines along with some chords.
Straight Harp is still used by many players today, but due to its simplicity of sound, it is not as popular as Cross Harp.
The evolution of music introduced Blues, Rock and Country and along with these new forms of music came the need for greater expression.

Harmonica players began to experiment and found that when they primarily used the inhale notes, a different kind of sound was provided.
This resulted in a new and more fluid style of playing, known as Cross Harp.
 
90% of today's players use Cross Harp for Blues, Rock, Country & Pop music.
Cross Harp is a more expressive and soulful style because a different kind of "blues scale" is available
PLUS many of the draw reeds can be bent.