It is called a delay because without feedback or an external mixer, the input signal is merely delayed by length of the tape. Mixing the input with its delayed version and then feeding this signal back into the delay, however, creates an adjustable echo effect whereby the number of echos can be varied between one echo (no feedback) and an infinite number of echos (unity feedback) according to the feedback setting.
Initially this effect was implemented by using one or two 2 tracks (reel to reels), but later the mechanism was incorporated into single effect units, as in the Roland Space Echo series. The effect was popular in many genres of music, but since the introduction of the much cheaper and more reliable digital delay units in the 1980s, it has found a niche in the genres of techno and dub where it is sought after due to its quirky performance and analog properties.