In the context of cryptography, encryption has a specific meaning. Your intuitive non-standard definition may be interesting and useful, but its aking to bringing up perceptive hashing like what Apple's been introducing for CPAM on iCloud. At this point it becomes an overloaded term and the meaning depends on context. Words are more useful and efficient if we have a common understanding to stand on.

> I don't really understand the confusion around these terms in terms of day-to-day actual work. Is this really a problem?

It absolutely is. I've seen software that, instead of salt-hashing passwords in the DB, will encrypt them with an global RSA public key (not only less secure and way less efficient, you now also have an effective undocumented max-length of passwords).

Or, way more common, utilizing base64-encoding as "encryption".

If understanding of the differences was more widespread, at least these systems may have been less terrible.