you know, the AI answer is not that bad, but I have to wonder why you didn’t think about it. the peoples who would later become the Dutch and Germans used to refer to themselves using a similar term that meant ‘of the people’ because they saw themselves, collectively, as broadly similar peoples. OP is not wrong that English people use the word Dutch (rather than something like netherlandish) because there wasn’t much distinction made between German and Dutch at the time. That is, when a broader grouping than city or town was thought of at all.
you know, the AI answer is not that bad, but I have to wonder why you didn’t think about it. the peoples who would later become the Dutch and Germans used to refer to themselves using a similar term that meant ‘of the people’ because they saw themselves, collectively, as broadly similar peoples. OP is not wrong that English people use the word Dutch (rather than something like netherlandish) because there wasn’t much distinction made between German and Dutch at the time. That is, when a broader grouping than city or town was thought of at all.