Because it multiplies pixels together <img src="{SMILIES_PATH}/icon_smile.gif" alt=":)" title="Smile" />
I thought about calling it "Lighting" or something, but the standard name in all graphics applications is Multiply, so I thought I'd keep it consistent.
The way pixel shaders work is every pixel is made up of values ranging from 0 to 1 for red, green and blue. So a dark red might be RGB 0.5, 0, 0, and 50% grey would be 0.5, 0.5, 0.5.
If you use a multiply effect on a dark red background with a gradient from white (1, 1, 1) to black (0, 0, 0), you'll notice:
(1, 1, 1) x (0.5, 0, 0) = (0.5, 0, 0)
i.e. the white areas of a multiply effect have no effect on the background
(0.5, 0.5, 0.5) x (0.5, 0, 0) = (0.25, 0, 0)
i.e. the 50% grey areas of a multiply effect darken the background by 50%
(0, 0, 0) x (0.5, 0, 0) = (0, 0, 0)
i.e. the black areas of a multiply effect are always black (anything multiplied by 0 is 0).
This means you can use a greyscale image with a multiply effect to darken regions of the background by different amounts, making a nice lighting effect.