It seems lots of recent startups are using the .io domain. What are the reasons behind this? It must be more than just domain availability, as there are lots of domain extensions to choose from with lots more availability that .com and .net.
Agreed. Domain name availability is very hard sometimes. For others it might just make sense. Example: if I created a webapp and for some reason wanted to call it Sendio, sendio.com is taken but I can always get send.io and run my app from there with a cool url
1 - It implies IT tech related, IO = input/output, as pointed out by otoburb;
2 - Domain name availability, as pointed out by yolesaber;
3 - Google named its developer conference 'Google IO', just a guess.