Cheetos - There's actually some engineering history here. Engineers have to use the inside diameters of pipe for their flow calculations. So as iron pipes first came into use they were produced in standard ID sizes. A 1" pipe had a 1" ID. The job of connecting pipes was a challenge. As machines for cutting threads became available, the need for standardized thread sizes became obvious. In order to avoid reducing the effective flow ID of a pipe, connection threads are always on the OD. That meant that both pipe OD's and thread sizes had to be standardized. So the OD of a 1" ID pipe (made of iron or a low grade steel) was standardized at 1.315". That allowed the threads for a 1" pipe to also be standardized, and standard thread tooling became available. All's well.
Time passed. Better grades of pipe materials became available, which meant that wall thicknesses for standard pressure ratings could be reduced. But reducing the standard OD of pipes also meant changing all the standard thread sizes, and all related tooling, and all standardized labeling and inventory factors, etc etc. Or... they could just say that going forward the standard ID of a pipe that accepts a thread labeled as "1" NPT" is now 1.049. That was MUCH easier.
A similar argument applies to explain why the ID of sch. 80 pipe is less than the ID for sch. 40 pipe.
So, we are still living today with pipe thread sizes that were originally created for pipe made from lower grade materials.
That's why every young plumber or engineer encounters this same confusing situation when they learn that there is NOTHING about a 1" pipe that is actually 1".