old post : http://www.theyeshivaworld.com/coffeeroom/topic/why-is-challah-braided
Having 12 challos comes from the Arizal quoted by the Ben Ish Chai Parshas Vayara 15 and he shows how to set it up. See the GRA who explains the 12 challos as splitting the two into 4 by the three meals = 12.