Why do pencils have numbers?

The number on pencils, indicate the softness or hardness of the graphite or color being used. A number 2 pencil is softer than a number 1. The hardness of a pencil determines how much of the graphite is put down on the paper with each stroke. Soft pencils wear out quicker. Hope that helps...*p

Numbers and letters on the sides of some pencils (Art & Drafting pencils) are used to signify the type of lead that it contains, aka the hardness of the lead. The higher the number/letter combination, the harder the lead. Conversely, the lower the number/letter combination, the softer the lead.