'Facility' has come more and more to mean a place where one does something. This sense was just coming into use in Webster1913's time, the first recorded use being in 1872. One now has sports facilities, study facilities, and health care facilities. These days it is so common to speak of various facilities that it's hard to believe that not too long ago people actually referred to gymnasiums and sport arenas, libraries and studies, hospitals and doctor's offices by their actual names.
Once places started becoming facilities, one place inevitably became the facility. If someone asks to "use the facilities" they are asking for the restroom. Strangely, although you usually only need one toilet, the washroom is always referred to as the 'facilities' rather than the 'facility'. This may be because the loos in question are often public restrooms.
Toilets are resigned to being called odd names, and do not resent it. But you really shouldn't over-use the word. In some cases it's used as a matter of politically correct doubletalk (as in correctional facility), in others it's a matter of not having an obvious label for an area (such as a training facility). Usually it's just a buzzword (storage facility vs. 'storage sheds', or worse, 'parking facility' in place of a parking garage). When in doubt, you can simply call it a facility, and you'll sound modern and progressive rather than just confused. I don't have any idea who decides to call things what, but if it's you, please don't call your thing a facility.