How did the Church decide that seven is the age of reason and of First Communion?

The Church does not define the age of reason as seven. Rather, it does not bind Catholics under seven by merely ecclesiastical laws, and even after seven, children without the use of reason generally are not bound. Canon 11 says merely ecclesiastical laws bind those baptized in or received into the Catholic Church who have the sufficient use of reason and, unless the law says otherwise, have completed their seventh year.

First Communion has no age requirement. The Church requires that children have the use of reason, know and understand what the Eucharist is, and be properly disposed:

• Canon 913 §1: children need sufficient knowledge and careful preparation, so that they understand the mystery of Christ according to their capacity and can receive the Body of Christ with faith and devotion.
• Canon 914: parents, those who take their place, and pastors must see that children who have reached the use of reason are properly prepared and, after sacramental confession, receive this divine food as soon as possible; the pastor must see that children who lack the use of reason or are not sufficiently disposed do not approach Communion.