[napum]

I'm guessing it's because /etc contains configuration files and dot-files are just configuration files. Or do you mean, why was /etc named etc?

[petercooper]

For the latter, a lazy copy/paste from Wikipedia:

"There has been controversy over the meaning of the name itself. In early versions of the UNIX Implementation Document from Bell labs, /etc is referred to as the etcetera directory as this directory historically held everything that did not belong elsewhere (however, the FHS restricts /etc to static configuration files and may not contain binaries)."

[deno]

I think they meant the latter. Why is it /etc instead of, perhaps more obvious, /config or /settings?

[malkia]

If it was meant for configuration - probably it would've been - /cfg /ini /set /opt /flg /arg /prm (params)

As someone said - naming things is the hardest!