Installing custom ROMs: since most Android systems don't have a ROM, isn't this a misnomer?

My Samsung Galaxy SIII seems to have an internal SD card as internal memory, and no ROM (Read-Only Memory). AFAIK ROM refers to a type of memory which can be only modified by attaching cable attached to a special device and flashing; once the ROM is flashed, it is for all purposes read-only from the point of view of the users logging into the OS. Many sites report that one of the benefits of rooting is installing custom ROMs. So why is installing an alternative system UI such as Cyanogenmode still referred to as installing a custom ROM? Isn't it just replacing some files in the /system Linux directory with some other files, i.e., deleting or backing up some old files and copying the replacement files to that directory?

Thanks.