It isn't a great name, but: it doesn't bare a contradiction in itself (contrary to "serverless"), there was already a tradition of drawing unspecified networks or internet as a cloud in diagrams. So "running in the cloud" as running "somewhere in the network we used to draw as a cloud" has an explanation.
Also note, I didn't state that there are only two types of names. I commented on what "bug" and "serverless" is.