The first book in the series, which shares the same name as the guide the hitchhiker Ford Prefect uses to navigate the galaxy, declares a towel the most important item a hitchhiker can have, and “to know where one’s towel is” is tantamount to being in control of one’s own life. From chapter 3:
The Hitchhiker’s Guide to the Galaxy has a few things to say on the subject of towels.
More importantly, a towel has immense psychological value. For some reason, if a strag (strag: non-hitch hiker) discovers that a hitch hiker has his towel with him, he will automatically assume that he is also in possession of a toothbrush, face flannel, soap, tin of biscuits, flask, compass, map, ball of string, gnat spray, wet weather gear, space suit etc., etc. Furthermore, the strag will then happily lend the hitch hiker any of these or a dozen other items that the hitch hiker might accidentally have “lost”. What the strag will think is that any man who can hitch the length and breadth of the galaxy, rough it, slum it, struggle against terrible odds, win through, and still knows where his towel is, is clearly a man to be reckoned with.
Hence a phrase that has passed into hitchhiking slang, as in “Hey, you sass that hoopy Ford Prefect? There’s a frood who really knows where his towel is.” (Sass: know, be aware of, meet, have sex with; hoopy: really together guy; frood: really amazingly together guy.)
–Douglas Adams, The Hitchhiker’s Guide to the Galaxy as quoted from Ford Prefect’s electronic copy of The Hitchhiker’s Guide to the Galaxy