The drive letters are pretty easy to understand. The 'boot' drive (the main HDD) gets assigned DriveLetter C by the OS. You can't change that. The Operating System recognizes the Disk partitions by the DriveLetter. Windows Explorer recognizes the same by the VolumeName. The 'Local Drive' is used when you haven't given the partition or volume a more specific "Friendly Name", so its the 'default' name until you change it.
Drive letters A and B, don't worry about or use. They are for the older Floppies, or Removable drives.
Drive D: is the next assigned DriveLetter and almost always gets assigned to your CD or DVD.
After that, the Disk Partitions are assigned the next letter in order, as well as the FlashDrives or Removable drives.
If you don't assign a specific DriveLetter to a device, the OS just assigns them in alphabetic order.
You can specifically assign a Disk Partition a DriveLetter, and VolumeName, which then don't change. For example, you could assign the DriveLetter 'K' for a BackUP disk Partition, and give it the VolumeName of 'BackUp Drive', or whatever.
You can see this, and do it by going to Disk Management, and look in the bottom graphical section. You can right click on any partition (other than the C: drive or hidden system partitions) and assign it an unused DriveLetter. You can also remove a letter from use and it goes back into the pool, or change a drive letter, like you might have to do. Then chick on Properties and give that partition a VolumeName. When done, it will remain fixed unless you change it later. The VolumeName and DriveLetter, like 'BackUp, K:' will then show up for that 'drive' in Windows Explorer.
So the DriveLetter & the VolumeName are how the OS, Windows Explorer, and you can identify the drive or partition you want to use.
You must be logged on as an administrator to perform these steps.
If you don't like the letter Windows has assigned to a new drive or you want to organize your drive letters in a certain way, you can change the drive letter.
You can assign the letters C through Z to each drive on your computer. A and B are usually reserved for floppy disk drives, but if your computer does not have floppy disk drives, you can assign A and B to volumes. You can see which drive letters are used on your computer by opening Computer.
Open Computer by clicking the Start button Picture of the Start button, and then clicking Computer.
You can change, add, or remove a drive letter by using Computer Management.
Open Computer Management by clicking the Start button Picture of the Start button, clicking Control Panel, clicking System and Maintenance, clicking Administrative Tools, and then double-clicking Computer Management. Administrator permission required If you are prompted for an administrator password or confirmation, type the password or provide confirmation.
In the Navigation pane, click Disk Management.
Right-click the partition or drive that you want to change, and then click Change Drive Letter and Paths.
Do one of the following:
To assign a drive letter if one has not already been assigned, click Add, click the letter that you want to use, and then click OK.
To change a drive letter, click Change, click Assign the following drive letter, click the letter that you want to use, and then click OK.
To remove a drive letter, click Remove, and then click Yes to confirm that you want to remove it.
"You cannot change the drive letter of the partition that Windows 7 is installed on. In a normal Windows 7 system, this is the "C" drive."
You can't change the drive letter on the Boot or System Volume.
As per Microsoft Press Publication "Windows 7 Inside/Out" 2010.