.NET enabled Microsoft's marketing people to emphasise the "Network"-ing aspect of its technologies, and was also a reaction to the marketing blitz by Sun Microsystems in the late 1990s whose theme was "The network is the computer". The term "Dot-Com" was synonymous with the Internet that time, and "Dot-NET" was a play on that term.
I don't think it is a bad name at all, the problem was that Microsoft named so many products with the ".Net" nomenclature like .NET My Services and Microsoft .NET Enterprise Servers where the latter had nothing to do with the Internet. It caused so much confusion. Only later did Microsoft correct things by limiting the .NET name to technologies related to the Managed Runtime Framework.