Why is it called LeafGreen and not WaterBlue?

The remakes mirror the originals, and the originals were Red and Green. FireRed and LeafGreen, released in Japan on January 29, 2004, take their names and their mascots, Charizard and Venusaur, from the pair that launched the series in Japan in 1996. That Green never reached the West at retail in 1996 is precisely the gap LeafGreen closes: for Western players, 2004 was Green's first retail appearance in any form.

The alternative name is real, but the famous evidence for it is not. It is often reported that Nintendo filed a trademark for WaterBlue, the name a Western-mirroring third remake would have carried. Bulbapedia's record of the core series states the opposite: contrary to what is sometimes reported, no equivalent Blue trademark was filed by Nintendo, Creatures or Game Freak. What actually exists is Junichi Masuda's blog post of August 2004, in which he mentioned WaterBlue while explaining the titles that shipped.

Masuda's reasons were about meaning. In his account, a leaf is a symbol of peace, while fire and water stand in opposition and suggest conflict; he also judged the leaf easier to grasp and to translate, and wanted a colorful drawing of a member of Bulbasaur's family on the box. LeafGreen is therefore not a consolation name or a leftover. It is the peaceable half of a pair designed to sit together.

LeafGreen is therefore a small act of historical correction printed on a box: the West finally got its Green, eight years late and considerably improved.