That they can have a hairy look is a reason for calling them caterpillars.
Specifically, the word can be traced back to the Middle English catyrpel. It comes from the Late Latin catta pilosa by way of the Old French chatepelose and the Old North French caterpilose. The original meaning in French and Latin was "shaggy cat", probably in reference to such hairy-looking caterpillars as the woolly bear (Pyrrharctia Isabella).
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The caterpillar got it's name from the French and Latin languages. The Latin word pilare, means to grow hair. The French word chat means cat. So from those two words came the word chatepelose which means hairy cat. This was interpreted in the English language to caterpillar.
because caterpillars only have 6 legs the rest are fake, which are the ones called prolegs