Why are white dwarf stars called so?
Because of the Way they appear.
Because of how they appear literally. A white dwarf is White and Small about the size of the Earth, perhaps a tiny bit bigger hence a dwarf star. White Dwarfs is a core of a doomed Star similar to our Sun, made up mainly of oxygen and Carbon and is extremely hot due to intense gravity acting on such small size which squeezes the atoms tightly to increase pressure.
As answered in a lot of questions previously, a White Dwarf is the remaining core of a Sun like Star. When the Sun consumes all of it's Hydrogen it will expand into a Red Giant with Helium in it's core. This is when it starts to burn Helium in the core to produce Carbon by triple-alpha reactions. When it consumes all of it's fuel the fusion will stop and the inward acting gravity will collapse the Star of it's core, the outer layers will expand and will blow off into a Planetary Nebula leaving behind a hot extremely dense core in the middle of it, a White Dwarf.
Even with such intense temperatures White Dwarfs are extremely difficult to detect as they are quite small compared to a Star. If the area is small the Luminosity is low.