"space" is just a common English term for this kinda thing, as you can see in any dictionary ever:

Collins: "A particular kind of space is the area that is available for a particular activity or for putting a particular kind of thing in."

Cambridge: "an empty area that is available to be used"

why do you think Twitter called them spaces in the first place?

Not saying the word doesn't make sense, questioning it's use from a branding/identity standpoint. It's already taken/associated with an aspect of another network that like it or not is still in proximity to whatever AT proto/Bluesky are developing. Just call it something else! ("hardest thing in computer science is naming things" etc etc)