Yeah, it definitely is more appealing from a marketing perspective.

I do understand why some projects might wanna use the term, it’s to their advantage to be associated with “open source” even if the source code itself has a proprietary license.

The problem is that then it makes it harder / more confusing to check for actually openly licensed code, since then it’s not clear what term to use. Already “free software” can be confused with “free as in free beer”.