The name WSL has always struck me as a bit back area (LSW would seem to make more sense, since it is a Linux subsystem for Windows). I guess they mean it as a Windows Subsystem for Linuxing.

Anyway, should this be called LSL or WSLL? Or maybe LSWSL.

It's an issue because Linux is a trademark. Microsoft cannot call something a "Linux something" without infringing a trademark, but they can say something is "for Linux" the same way third-party companies could market e.g., WordPerfect for Windows. Hence Windows Subsystem for Linux, mirroring the old Windows Services for Unix:

https://en.wikipedia.org/wiki/Windows_Services_for_UNIX

It's a subsystem instead of "services" because WSL1 really was an NT subsystem: a "kernel personality" that knows how to interpret Linux system calls just like the DOS and OS/2 subsystems of early NT.

The naming is a bit awkward now, but an original design goal of the Windows NT kernel was the ability to host different types of OS "personalities" (userspace, essentially) on top of the Windows kernel, and these are called "subsystems." Win32 is one such subsystem, although there was no need to formally call it "Windows Subsystem for Win32" because everyone understood that it was just Win32 ported to NT.

The NT kernel designers came from VMS, and during development MS made various half-hearted promises that NT would be able to run VMS software as well but never actually followed through. If they had, there would likely have been a Windows Subsystem for VMS.

Notably there was Windows subsystem for OS/2 though

OS/2 subsystem, for Windows NT :). And a few others: https://helparchive.huntertur.net/document/52712

It’s to do with trademark usage as I understand it.

It is continuing a historic naming "accident", the precedent having been set by Windows Services for UNIX and similar in the 90s/00s.