Why Are The Netherlands also Called Holland and the Low Countries? And Why Are Its People called Dutch?
Actually, the official name of the country is Nederland, the name native inhabitants call it - "Netherlands"...
by Daniel Marcus; Watertown, Massachusetts

Our pet theory was that the official name of the country was "the Netherlands", but the "Holland" was used to make it easier for the mapmakers to fit the name within the confined borders. Actually, the official name of the country is Nederland, the name native inhabitants call it - "Netherlands" is simply the closet English equivalent.

The word "nether" means below the earth's surface. The low and marshy lands near the mouth of the estuary of the Rhine River are responsible for the name, "the Low Countries". The German name "Niederlande" and the French name "les Pays-Bas" are exact translations.

By why "Holland"? 

Holland was the name of the province not the whole country. In the sixteenth, seventeenth, and eighteenth centuries, it was by far the most important province commercially, and Hollanders displayed more devotion to their province than to the nation as a whole. Holland eventually became a dominant that, much in the same way that the Soviet Union is mislabeled "Russia", Holland came to represent all of Netherlands.

Further confusing the issue is the term "Dutch", used to describe the citizens of the Netherlands. "Dutch" is actually older than "the Netherlands". Until the sixteenth century, inhabitants of the Netherlands called themselves Diets (which mean "the people"). This word, pronounced "deets", was corrupted in English as "Dutch". The British continued to use the medieval name long after Netherlanders stopped using it themselves.

Americans tend to use the word "Dutch" not only to describe Netherlands, but also Germans. Thus, while the Holland Dutch from Michigan are true descendants of Netherlands, the Pennsylvania Dutch are actually German. (The "Dutch" in Pennsylvania Dutch almost certainly stems from the corruption of the German name for their country, Deutschland.) "To stop this confusing multiplicity of names the Netherlands Government has tried to use the words "The Netherlands' as the name for the country and "Netherlander" as the name for an inhabitant of the Netherlands. It is easy to decree such a thing, but it takes much time to suppress a time-honored word used in foreign countries".

Netherlanders have to deal with confusion not only about the name of their country, but about the name of their capital. Amsterdam is the official capital, but the seat of government is The Hague. The official name of The Hague is 's-Gravenhage, "the count's hedge", except nobody calls the city 's-Gravenhage, preferring the colloquial Den Haag (the hedge).

For such a small country, the Netherlands has its share of identity problems.