Why are they called "consoles"?
AFAIK, In computing, the name "console" for machine interface came from the fact, that initially it was a literal console table with typewriter on it. But gaming consoles never were anything like that.
Update
I've stumbled upon a video of an old Atari add, and in the add it is called 'Video Computer System'.
video
Best Answer
The term "console" in electronics originates with the "consolidation" of multiple component parts into a single unit. The term itself grew in popularity alongside the micronization of consumer electronics and industrial technology alike. Earliest references typically address a console as an array of switches which consolidated the controls for multiple machines. This is why a Commodore 64, which has multiple control and interface units connected to its processing base and screen, is considered more along the lines of a traditional computer than, say, an Atari 2600.
Marketing companies aggressively used "console" in consumer electronics because it was synonymous with micronizing awesome new technology. Similar to phones now, it was a trend to cram as much capability as you could into a cabinet or other piece of furniture (i.e. the common Television becoming a Television Console when it was inside a wooden frame that often had drawers). Even then, however, Nintendo's flag products were "Entertainment Systems" and Sega called theirs simply "Systems". All of these words were carefully chosen in marketing to tell consumers that the single device did the job of several. That was the 70's/80's/early 90's theme. "It doesn't just dice, it makes julienne fries! It doesn't just play Adventure, it plays Pong! It's not just a computer; you don't need a mouse or an expensive screen. It's a console!"
We'd probably still have a lot of references to "System" if it weren't for the collapse of the video game market and the foundation of the internet increasing the number of PC users dramatically. Now, that word can mean anything, as both PCs and Consoles are computer systems, to the point that you can even install Linux or Windows on some consoles.
The reason console is perpetuated is, again, marketing. The word comes with it an expectation of the product; you dont' expect it to replace your computer, you expect it to play your games. Likewise, you know it's something different than a PC, because some of those games will never be on PC. Even though the fundamental hardware is almost identical. Even the "Console vs PC debate", which is really just "which controls do I like better and how often can I do upgrades", benefits marketing for both Console and PC game publishers (who are usually the same people). It's now just a word to differentiate the "console games" from the "PC Games", which allows them to drive their exclusives markets.