Question

Why are the inner planets called "Terrestrial planets"?

Answer 1

Terrestrial means "Earth-like" in this context.

The inner planets (Mercury, Venus, Earth and Mars) all have a stony surface, whereas the outer planets (Jupiter, Uranus and Neptune) have no real surface, but they are so-called "gas giants", that are mostly composed of more or less liquid gases.

The inner planets are also very much smaller.

Mercury has no atmosphere to speak of: most of it cooked off by the intense radiation of the Sun. Venus has a very dense hot atmosphere. Earth has the atmosphere we all know, partly because of the magnetic field preventing most of it cooking off, and Mars has a very thin atmosphere -- mainly because it has no magnetic field, and because it's smaller than Earth, that's why it cooled faster.