Uh, that's exactly what reset means, especially when it comes to a video game.
For example, if you're playing Super Mario Bros, and you press the reset button on your Nintendo, the game starts all over again from the beginning, with all your progress being lost. That's the exact same situation in Classic WoW= You start all the way over at the beginning of WoW before all the expansions and all the changes. Hence, a reset.