The Canyon environment is what canyons look like as I know them. The canyons I'm most familiar with are ones from the southwest like
this and
this, and also
this.
You're right that they can have different ecosystems. I'm sure there's a lot of different kinds of canyons around the world, even some in our oceans (or are those called trenches?)
The funny thing to me about the Canyon environment is that most people seem to build above the surface and never even make any "canyons". lol
To call it Desert 2 would have been more encompassing and made more sense, but it also would have been more confusing. I'm glad they went with a new name, even if its a misnomer in many cases.
There's other environments that have been oddly named. Island for example. Well Coast could have also been called Island since it is also usually on an Island. Or what about the Desert environment itself? Didn't it used to be called "Speed" and the car was called "American"? Well speed could fit every environment of TM, given the right track.
But now I'm just rambling. So I'll stop there.