Why does my 16GB iphone only have 13.25GB capacity?

I think it's kind of strange that my 16GB iPhone only has a memory capacity of 13.25GB. Does anybody know why this is? I assume it's because that's how much memory is left after the operating system is installed, but I think it's rather bizarre to advertise it as 16GB when that's not what you'll actually be able to use.

Any phone, computer, laptop etc will have some of it's capacity occupied by the operating system

Because part of the GB is used for the phones operating system, firmware and for any updates for the phone. It the same thing with your laptop, desktop, tablet and video game system.

Do you think it runs on thin air? Obviously it needs some space.

A 16gb iPhone only has 13.25gb of space because of the apple apps downloaded onto the device. Such as stuff like FaceTime, contacts, ect take up space and apple along with many other companies don't provide you with the whole 16gb of space/storage when it is freshly bought.