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This reminds me of UX. Seems like it could be a subdomain.

I think I disagree with your basic point, though what you say about normal vs. hard is funny. I'm fortunate enough to work with a UI/UX pro, and these things have right answers; they're incredibly obvious after they've been explained to you.

Makes me think of a game like FTL, where “easy” was challenging for quite some time, and now I play normal if I want a challenge!

There's nothing wrong with opinionated design. The dev has set the bar this high and chosen this thing to represent difficulty levels, either you like it or you don't. Catering to everyone is impossible.

This is true, but you don’t want people to bounce off the game immediately, so they have a bad time and refund it before giving it a proper go.

This can happen if they feel it’s easier or harder then expected.