Why do people say 700c wheels are 29 inches, when the rim has a diameter of less than 25 inches?

Partly it's because of an inane need to classify bike tires in inches. A 700c rim is actually 622 mm in diameter. This size is often referred to as 28" because if you put a 38mm tire on it, it's close to 28 inches in outside diameter. Likewise, if you put a 54mm tire on a 700c rim, you end up with a 28.75 inch combination, so it's rounded to 29 inches.

The 'C' in 700c does not refer to centimeters, it is an alphabetical variation. There are also 700A and 700B sizes.

Bicycle tire sizing is both accidentally and deliberately confusing. The numbers don't mean a whole lot outside of the bicycle context. The main thing is the numbers describing the rim and the tire have to match. Read this:

https://sheldonbrown.com/tire-sizing.html

Because they don't know what they're talking about. The actual diameter of the complete wheel when fully inflated is 700 mm which is approximately 27.56 inches. The "C" at the end was a leftover relic from the past representing tire width; similar to the way shoe width is represented.

Correction: People say 700c TIRES are 29 inches.  I've never heard anyone referring to the wheels as 29 inches.  Target refers to 700c as 28". https://www.target.com/p/schwinn-men-s-circuit-700...

You can blame the discount stores for starting this confusion.  Sigh...roll eyes. 🙄      Sheldon Brown's Tire Sizing Systems  https://www.sheldonbrown.com/tire-sizing.html

Isn’t the rim the inside diameter while the wheel is measured by the outer diameter.