When the original Macintosh was designed, ROM was faster than RAM, and RAM was expensive, so a large part (though not all) of the Macintosh's operating system was implemented in ROM, so that common routines (such as libraries, graphics routines, etc) did not need to be loaded from an operating system file at all. The part of the operating system loaded from disk was named the Macintosh System Software (which many years later was renamed "Mac OS", and is now referred to as "Classic Mac OS".)
A "trap" mechanism was used to allow software patches to the code in ROM: any requests for that resource were "trapped" and rerouted to the patched version in RAM.
With the release of the iMac, the first "New World ROM" Mac, the Toolbox ROM disappeared as hardware, instead re-implemented as a ROM file on the hard disk. The Open Firmware boot ROM loaded the ROM file into RAM, at which point the Classic Mac OS startup process continued as usual.
The Macintosh Toolbox was originally prototyped and debugged in Pascal, and then rewritten in Motorola 68000 assembly language for speed and to fit within the size constraints of the ROM technology available at the time.
Many other Macintosh APIs have been referred to as toolboxes.
Sources and References
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