Actually, the issue is that Bach's altos were male, although whether or not they were pre- or post-pubescent remains an open question. So altos back then would necessarily have had lower tessituras than modern altos: you will only rarely see a Bach alto go above D, whereas by Bruckner and Mahler's time, choral altos are sometimes expected to reach a high A!
As for the placing of the alto clef, that's a different issue: there are only so many positions on the staff you can put the C clef. None of them correspond well to the alto range—although the alto clef probably does the best job overall of minimizing ledger lines. Copying music was generally done by hand, so anything that could save time (by virtue of not having too many leger lines) was "better."