They copied the name from C/C++; a char in C is different, only occupying 8 bits. When Java® was introduced, Unicode only went up to 16 bits, so things like code points are later additions which are much more awkward than they would have been if >16‑bit Unicode had been around then.
Stephan van Hulst wrote:. . . There is no agreed upon meaning of the word "character". It was probably a mistake by the Java designers to call char a char, and to call Character a Character. They don't represent characters, they represent UTF-16 code units. . . .