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The political and economic center of Japan, Tokyo is the center of the largest metropolis in the world at 35 1/2 million people, roughly 30% of the entire Japanese population. (OK, legally Tokyo is one of Japan's 47 prefectures that encompasses the original city itself and the western suburbs, but the whole place including Saitama, Chiba, and Yokohama is so crowded and built-up it's easier to count it as a city.) That's pretty much the reason why Tokyo Is the Center of the Universe as far as Japanese media is concerned.
Up to the end of the 16th Century, it was a small fishing village called Edo. The political center of Japan at the time was in Kyoto, while the economic center was in nearby Osaka - both located in the Kansai Plain. The Kanto Plain, where Tokyo now resides, was at the frontier of Japanese civilization (the "Wild East", as it were.) Following the Sengoku Jidai, Tokugawa Ieyasu set up shop in Edo because of its rich farmland and made it his center of power. The capital was still officially Kyoto, and the Emperor still lived there, but the true power in the 17th through mid-19th Centuries was in the Tokugawa Shogunate's hands.
When Commodore Matthew Perry arrived in 1853 in his Black Ships, Japan realized just how far behind they were compared with the "barbarian" West, and set upon a crash modernization program. By this point, Edo had grown to a million people, and when the capital and the Emperor were transferred to the city it was renamed Tokyo, which literally means "Eastern Capital" (東京). From here on, Tokyo (really all of Japan's cities) exploded in growth as the nation industrialized.
Tokyo had its share of disasters - the Great Kanto Earthquake of 1923 caused massive fires all over the city (it struck around lunchtime when people were cooking, and buildings were made of wood because said earthquakes discouraged building with heavier materials), and during World War 2 it was the target of many Allied air raids, the most (in)famous of which were firebombing runs. Tokyo wasn't the only city that got torched, but as the largest city and with so many buildings made of wood, those bombing runs killed more people (directly) than even the atomic bombs dropped on Hiroshima and Nagasaki. This is part of the reason why The Tokyo Fireball is used so often in Japanese media - it's been such a part of their history (not that it's good or that it was just World War 2 that placed it in the collective conscious.)
After the war Tokyo and the rest of Japan rebuilt themselves. Foreswearing war as a political tool (Article 9) and reliant on the US for defense in the Cold War, Japan set about dominating the world economically. The Japanese economic miracle in the 1960's and 70's was hailed as a triumph of capitalism, and Tokyo as the central engine of it rode the boom to the top of the world's greatest cities. The city felt the effects of success in the 1980's when real estate in Tokyo began to reach truly mind-boggling heights - by 1989, office space in Ginza, Tokyo's main business district, reach 100 million yen (US$1 million) per square meter. Corporate Japan felt invincible, and most of the US was inclined to agree.
Then 1991 came around.
The bubble burst, the Nikkei (the main stock index for the Tokyo Stock Exchange) tanked badly, Japan's economy hit turbulence, and thanks to the Japanese government's closeness with its business (to be fair, such closeness was what enabled Japan to rocket out of World War 2 destitution in the first place), it did too little too late to turn it around in time. Japan's economy has been stagnant ever since - two "Lost Decades". For Tokyo's part, it's real estate price fell to just 1% of that 100 million yen figure in 1989.
Still, Tokyo continues to grow even as Japan as a whole ages and its overall population declines.
- ↑ (Incidentally, Kyoto was renamed Saikyo (西京, "Western Capital") for a short time, and the area around Nagoya, which lies about halfway between the two cities, is sometimes known as the Chukyou Area (中京, "Central Capital".) 北京 ("Northern Capital") and 南京 ("Southern Capital") are, respectively, Beijing and Nanjing, in China.