If I understand correctly, "revert" means to reload the file in the file system into the emacs buffer
This is correct.
(There are other details which you can read about in the documentation, including what "revert" means to non-file-visiting buffers; but broadly speaking your understanding is accurate.)
so the buffer will be updated with the latest change to the file made outside emacs.
More generally, so that the buffer will be updated with the contents of that file regardless of whether the file has been changed.
This is more obvious in the context of the
Consider that you have made a sequence of un-saved changes to the buffer, and you decide that you want to start over. Here, "revert" makes perfect sense -- you are going back to your starting point.
It's certainly true that other programs might have modified the file since you visited it in emacs; but that's not the scenario for which this command was named.
revert-buffer puts it like so:
Replace current buffer text with the text of the visited file on disk.
This undoes all changes since the file was visited or saved.
With a prefix argument, offer to revert from latest auto-save file, if
that is more recent than the visited file.
18.4 Reverting a Buffer
If you have made extensive changes to a file-visiting buffer and then
change your mind, you can “revert” the changes and go back to the saved
version of the file. To do this, type ‘M-x revert-buffer’. Since
reverting unintentionally could lose a lot of work, Emacs asks for
Consequently, "revert" is the common terminology for making the buffer contents match the saved file contents; and it applies even if the revision you are "reverting" to turns out to have been written by something other than Emacs.