It's not that the name doesn't make sense, it's just that it collides with a very common TLD for LANs. It shouldn't be squatting on a name humans want to use. Computers are unlikely to do the correct thing when you ping a .local on a network that uses that suffix, because they have to decide how to handle the potential name collision (which is still somewhat frequent, more than 15 years later).
It's the other way around, though? .local's usage on LANs prior to the RFC was squatting on a non-reserved TLD. The RFC finally reserved the TLD for an appropriate usage. The name applies equally to both usages, the usages can live side-by-side, and the RFC is even kind enough to support that (though as you point out frequently don't always work as expected), even though it didn't need to take into account backwards compatibility with "squatters".
