Maybe it's some marketing thing? Like their feature MUST start with Windows™ regardless of getting confusing as hell, it may also help not techie people who make decisions and want to still use a Windows™ solution suggested by a techie
WSL 1 is a compatibility layer that lets Linux programs run on the Windows kernel by translating Linux system calls to Windows system calls, so in that sense I understand the name: it’s a Windows subsystem for Linux [compatibility]. It doesn’t use the Linux kernel at all. With WSL 2 they’re using a real Linux kernel in a virtual machine, so there the name doesn’t make much sense anymore.
"Windows subsystem for Linux software" would probably have been a mouthful.
It's not really that ambiguous in practice. Linux doesn't have "subsystems", but Windows architecture calls them that. 64-bit Windows has a "subsystem" for 32-bit applications. And a separate "subsystem" for console applications (command line). Etc etc