As others pointed out, this was a different era - more the Yahoo era than Google's, when organizing the Web still seemed (to some) an attainable goal. I worked for the guy behind this at the time, though not on this project, and it seemed very odd to me even then... this is not only a product of its time, but very much a product of the unique and quirky museum technology culture.
Shorter names weren't seen as necessarily good - at least within some of the conversations around this TLD's inception there was some scorn for the overly techie, terse TLDs and domain names.