The answer is political.
I was somewhat surprised to find out that calling the entire esplanade "Al Aqsa Mosque" (al-Masjid al-'Aqṣā) is not a new phenomenon. Some noted Muslim geographers and scholars used that term as early as the tenth century, as the word "masjid" is not a direct translation of "mosque."
E. H. Palmer noted this in an 1871 article for the Palestine Exploration Quarterly:
However, during the Mamluk and Ottoman periods, some people decided to elevate the sanctity of the esplanade even more.
Not all Muslim scholars agreed. Yitzhak Reiter writes in Jerusalem and Its Role in Islamic Solidarity:
Although, as noted before, Ibn-Taymiyya refuted the haram status of the Jerusalem mosque, al-Aqsa's upgrading to haram status was successful and has prevailed. It became a commonly accepted idea and one referred to in international forums and documents.It was, therefore, surprising that during the 1980s the Palestinians gradually abandoned the name that had been given to the Haram/Temple Mount compound in apparent honor of Jerusalem's status as third in sanctity - al-Haram al-Sharif - in favor of its more traditional name-al-Aqsa. An examination of relevant religious texts clarifies the situation: since the name al-Aqsa appears in the Quran, all Muslims around the world should be familiar with it; thus it is easier to market the al-Aqsa brand-name.The increased use of the name al-Aqsa is particularly striking against the background of what is written on the Web site of the Jerusalem Waqf, under the leadership of (former) Palestinian mufti Sheikh Ikrima Sabri. There it is asserted that "al Masjid al-Aqsa was erroneously called by the name al-Haram al-Qudsi al-Sharif," and that the site's correct name is al-Aqsa. ... Sabri quotes Ibn-Taymiyya, who denied the existence of haram in Jerusalem, a claim that actually serves those seeking to undermine the city's sacred status. Sabri also states that Arab historians such as Mujir al-Din al-Hanbali, author of the famed fifteenth-century work on Jerusalem, do not make use of the term "haram" in connection with the al-Aqsa site.
Both Ibn-Taymiyya and Mujir al-Din were affiliated with the Hanbali School of law-the relatively more puritan stream in Islam that prevailed in Saudi Arabia. The Hanbalies rejected innovations, such as the idea of a third haram. One cannot exclude the possibility that the Saudis, who during the 1980s and 1990s donated significant funds to Islamic institutions in Jerusalem, exerted pressure on Palestinian-Muslim figures to abandon the term "haram" in favor of "al-Aqsa".
The entire claim that Jerusalem is the third holiest site in Islam is based on the idea that the Temple Mount is the third haram. By changing the name back to Al Aqsa, the Palestinians are diminishing its sanctity in Islam!
But they do it for marketing purposes - Al Aqsa is mentioned in the Quran (although almost certainly not referring to Jerusalem) and the Palestinian position is that the Quranic association with the name is a better means to incite Muslims against Jewish claims than the designation "haram."
It is all political.
