The word latency is a deliberate decision to emphasize that the value shown is a better representation of actual network play than a mere ping. How is ping calculated and how is latency different.
Ping is a simple round trip time for a message from one computer to another.
It is independent of whether the machine is playing a game etc. It generally is a best case communication round-trip time. In Half-Life, the server tracks round trip times for packets that it sends to the client. The problem that arises is that the client, if it is not running at a high framerate, can have the message sitting in its network queue for a significant amount of time. The scenario goes like this, on average, you can assume that a message arrives some time durring that 100 ms. window.