This is incorrect, you are mistaken about public domain and about what the article says. The very first criteria in OSI’s definition of “Open Source” is:

1. Free Redistribution The license shall not restrict any party from selling or giving away the software as a component of an aggregate software distribution containing programs from several different sources. The license shall not require a royalty or other fee for such sale.

“Rationale: By constraining the license to require free redistribution, we eliminate the temptation for licensors to throw away many long-term gains to make short-term gains. If we didn't do this, there would be lots of pressure for cooperators to defect.” https://opensource.org/osd-annotated

Public domain has no such restriction. Public domain always allows people to do literally anything they want, sell & redistribute the public domain code in any form they choose, make it proprietary, redistribute the code under any other license at all, and generally do anything they want for any reason including throwing away long-term gains for short-term gains.

IMO “free software” is misunderstood in exactly the same way “open source” is misunderstood, at least in the way you mean. Both terms are not good at getting the important point across in the title, because the words people want associated with the title aren’t actually in the title. This will forever be a problem as long as the title requires explanation (which it unquestionably does) and as long as software is a growing field and new people keep joining. I don’t know why the idea to say what you mean would get push back, we can’t expect people to interpret the phrase “open source” to mean more than what those two words imply. We can, and should, IMO, come up with a phrase that has words that imply the important bits. Following the CC model, maybe something like “derivation allowed” and “no discrimination”.