What if the toaster oven also had a clock on it? Mind blown.
The second word of its title implies that it's a clock that can do other things.
Right, but you wouldn't call that thing just an "alarm". It's either a clock, alarm clock, digital clock, etc. Clock is an essential part of that name because that's its primary function.
Same goes for a toaster oven. Its primary function is to be a smaller oven. Sure, it toasts things, but so does a full size oven; you wouldn't call the thing under your stove a toaster. The toaster is simply made to toast. The toaster oven can almost anything a full size oven can - you said so yourself. They merely decided to put in the word "toaster" to let the customer get a better idea of the size and power of what they were buying. Instead of calling it a mini oven, a counter-top oven, or oven
lite, they decided to stick in the name of the other small cooking appliance that commonly sits on the counter and is lower power: a toaster.
This is not to be confused with the nomenclature of the microwave oven which I could probably type another two paragraphs about.
P.S. Now I really want a toaster oven.