Okay, so they never really explained why Earth was changed to Terra, but this is my theory.
When humans encountered other species and they started to hang out, they figured out that all of the other species had names related to their planet, for the sake of space travel ease, such as BeTRASKan, SYDRAthi, and so on. But they were too busy fighting each other at this point.
Skip to peace. Humans have to chose a new name for their species or planet, and right now their options are pretty sucky. Earthling, Humanita, yead, all the names suck.
So, total makeover! Terra and Terrans! How did they come up with this? Maybe something found on Earth, or maybe it was a case of /spicy Zila/.
Thank you for coming to my Ted Talk.