There are so many terms in software which are nonsensical (starting with "computer science") which could be fixed.
The problem with changing whitelist to "allowlist" is that it implies that people who use whitelist are racists. You're not just virtue signaling (and confusing my spellchecker) but causing discord.
It would be perfectly fine if people switched to "allowlist" because they think it's a better term, but that's not the reason. They do it because they want to virtue signal or they're afraid of their peers (because they'll be called racists).
Using "allowlist" is actually bad because it gives agitators power and they keep changing more words to get more power.
I think that you are right. "Allow list" (or, in some contexts, "inclusion list") would be a better term, especially in contexts where colours are involved and it would be confusing.
The reasons that they usually actually have are not very good though, like you say, but nevertheless sometimes it can result in something better and sometimes not. But, banning words is not the solution, though.
It’s an interesting time we live in.
I personally don’t assume people who use whitelist are racist, or those who allowlist are virtue signaling.
However, I certainly do assume that people who chastise others for using “whitelist” are virtue signaling, and those who deride people for using “allowlist” are racist.
Both are easily understood and I generally assume good intention from people. Just live and let live.
That is exactly why I hate "allowlist", "main" instead of "master", and so on. The reason they were proposed is because some people were trying to play dominance games with grievance politics. We should attempt to resist such bad faith tactics, not propagate them. And yes, unfortunately that means I have to take a stand on something that is otherwise inconsequential. But such is the price of pushing back on self-righteous prigs who are trying to police terms of art.