[unnah]

That is the traditional explanation of why it is called reverse engineering. The term originated in hardware engineering. When it was originally applied to software, it was common to create requirements documents and design documents before coding, even if the actual process did not strictly follow the "waterfall" idea.

Thus it was natural to call the process of producing design documents from undocumented software "reverse engineering". These days coding without any formal design documents is so common that it seems the original meaning of reverse engineering has become obscured.

[knome]

What time period and area did you come across this usage? As I ever saw it used, 'reverse engineering' generally referred to creating docs from executables or watching network protocols rather than from source.

[unnah]

Back in the 1990's. As an example, back then the Rational Rose design software had a feature to generate UML diagrams from existing source code, and it was called "reverse engineering".

https://en.wikipedia.org/wiki/IBM_Rational_Rose