"Why 3?" you might ask.
Apparently, at regular Sabbath and festival meals, there are just 2 loaves of bread over which one recites the blessing. To distinguish the holiday of Passover, "a third is used to mark the joyous nature of the occasion," according to Rabbi Alfred J. Kolatch's "The Family Seder."
Kolatch cites scholars' explanation for the 3 matzot as representing the Jewish community: priests, levites and Israelites.
[Editor's Note]: Now I just love this. I had read an entirely different explanation for why there are 3 matzot. According to Rabbi Eliezer Papo, Dan Yadin Ve-alef Hamagen, a major rabbinic figure born in Sarajevo in the latter part of the 18th century, the three matzot symbolize thought, speech, and action (top, middle and bottom matza, respectively). Read on for the wonderful explanation of why we break the middle matza.
Btw, the photograph above captures a slice of my own personal history as the handmade matzo bag belonged to my ancestors.