Greenwich was at one time home to one of the great royal palaces, and currently has a large park that was enclosed by Henry VIII for hunting deer. The royal palace (Palace of Placentia) has quite a history of its own (http://www.historic-uk.com/HistoryUK/HistoryofEngland/The-Palace-of-Placentia-Greenwich).
What is of most important historical significance about Greenwich took place on a hill above where the palace stood in a collection of buildings, the Royal Observatory. Charles II founded the Royal Observatory in Greenwich Park in 1675 and appointed John Flamsteed as his first Astronomer Royal. The Observatory was built to improve navigation at sea and 'find the so-much desired longitude of places' – one's exact position east and west – while at sea and out of sight of land, by astronomical means.
Longitude is the exact position east and west. Without knowing how to measure it, ships couldn't accurately determine where they were. This was a major problem, especially on long ocean journeys when ships were making long voyages across the oceans and didn't have any visual clues for weeks at a time. A major shipwreck forced the issue to be solved and Parliament passed an Act declaring a reward for solving the longitude problem, should certain stipulations be met. It took nearly 60 years for the prize to be claimed. In the end it went not to a famous astronomer, scientist or mathematician, but to a little-known Yorkshire carpenter turned clockmaker, John Harrison, who invented four chronometers. His fourth chronometer, and the winner, changed navigation forever.
The Royal Observatory is also the source of the Prime Meridian of the world, Longitude 0° 0' 0''. Every place on the Earth is measured in terms of its distance east or west from this line. The line itself divides the eastern and western hemispheres of the Earth – just as the Equator divides the northern and southern hemispheres.
By international decree, the Prime Meridian is the official starting point for each new day, year and millennium. Prime Meridian is defined by the position of the large 'Transit Circle' telescope in the Observatory's Meridian Observatory. This was built by Sir George Biddell Airy, the 7th Astronomer Royal, in 1850. The cross-hairs in the eyepiece of the Transit Circle precisely define Longitude 0º for the world.
How did the center of the world become centered at Greenwich? Since the late 19th century, the Prime Meridian at Greenwich has served as the co-ordinate base for the calculation of Greenwich Mean Time. Before this, almost every town in the world kept its own local time. There were no national or international conventions to set how time should be measured, or when the day would begin and end, or what the length of an hour might be. However, with the vast expansion of the railway and communications networks during the 1850s and 1860s, the worldwide need for an international time standard became imperative.
The Greenwich Meridian was chosen to be the Prime Meridian of the World in 1884. Forty-one delegates from 25 nations met in Washington DC for the International Meridian Conference and voted 22:1 for Greenwich as Longitude 0º. The decision was based on the argument that naming Greenwich as Longitude 0º would inconvenience the least number of people.