I have done some searching but have not found a truly satisfactory answer. As a developer i want to invest the necessary time in understanding this, thus i am looking for a complete explanation on this and feel free to provide any useful references.
Thanks.
I would recommend buying this book by Andrew S. Tanenbaum. He developed one of the predecessors to Linux called Minix. I used Structured Computer Organization as part of my university course.
Why computers use binary is not just a matter of switch context.
Relative to a reference voltage of say 3v. +1v(4v) = true or 1 and -1v(2v) = false or 0.
It also has to do with the most efficient method of creating controlling or logic circuits. This has to do with cost of implementation. How much does it cost to build circuits that work with binary compared to circuits that work with decimal or analogue see this answer.
If you compare how many billions of binary circuit transistors fit on to a modern CPU. The cost of doing that with say decimal (or analogue) system increases exponentially for every digit you want to add as you now have to add that much more controlling circuitry.
If you want to understand some of the most important contributing components that have helped to make binary the default standard for logic and controlling circuitry read and understand the following topics from Wikipedia. It will take about 4 hours to read through the most important topics, which have to do with some of the electrical engineering used to create the circuits.
I tried to be complete in this list of concepts you need to understand how the actual switches work and why they are used. As well as why Binary Arithmetic is such an efficient form of computation in hardware.
Now for some hard cores stuff. C. and C++ is used to write device drivers that speak to actual hardware. If you really want to get into how certain devices work, your CPU, and or external devices learn Assembler. You will begin to see how you can switch off a device by setting a certain device register to a specific value, that will be read by a logic circuit to change the devices state. For example you will understand why (0101) base2 = 5 (binary related stuff) will route a specific way through the circuits to switch the device on and off.