Most servers are set to display a default page when someone points a browser to a directory rather than a filename. For instance, if you go http://allmyfaqs.net/ (no specific filename), the server will show you http://allmyfaqs.net/index.html. Some servers will only show index.html, and won't automatically present index.htm without the "l". In such cases, you have to use the .html extension, at least for the default file for the directory, if you want to use that auto-display function.
.htm is a throwback to the DOS days, of 8.3 long filenames. People started designing web pages in Windows 3.11 but couldn't save their files as .html, so they decided on .htm. They forgot to correct this muck-up, and that's why these prehistoric .htm files are still around. -- Isofarro
Also M$ Fr*ntP*ge uses default.htm instead of index.html, and saves files with the .htm extension -- Donald Noble