In reduction reaction, the reduced atom gains one or more electrons. Why, then, is this reaction called reduction?

The gain of one or more electron reduces the oxidation number.

Oxidation-Reduction reactions always include an oxidation half and a reduction half. Oxidation is the reverse of reduction. In oxidation, an atom or ion loses one or more electrons and its oxidation number is increased, and the atom or ion is said to be oxidized.

In the example below, the oxidation state of Mn is reduced from +4 to +2, and the oxidation state of Cl is increased (oxidized) from -1 to 0.