From the Freak Flag archive:

In ancient times, it was customary to congratulate someone who just
sneezed, because sneezing was viewed as the body's way to expel evil
spirits. This view may have been based on the observation that
people sneeze more often when they are ill, and illness was thought
to be caused by evil spirits.

In the fourteenth century, the black plague came to Europe
accompanied by violent sneezing among those afflicted. The Pope
passed a law that anyone who sneezed was to be blessed by those
nearby, with the hope that death might be averted. Today, most
people still say "Bless you!" when someone sneezes.

The Germans were a bit less religious about their sneezing customs.
To this day, they say "gesundheit" [geh-ZUND-hyt] after someone
sneezes, which simply means "good health."