It's indeed used for phonetic distinctness.
The German word for 2 is "zwei", which is relatively close to and even rhymes with the word for 3 "drei". "Zwo" is used to make it easier to distinguish the two.
The German word for 2 is "zwei", which is relatively close to and even rhymes with the word for 3 "drei". "Zwo" is used to make it easier to distinguish the two.