Isn't Factory Reset exactly the same as wiping /data and /cache? According to this article, 


  /data ... Wiping this partition essentially performs a factory reset on your device, restoring it to the way it was when you first booted it, or the way it was after the last official or custom ROM installation. When you perform a wipe data/factory reset from recovery, it is this partition that you are wiping.


What about /boot, /system, and /recovery, and /cache?  

If Factory Reset wipes only /data, then I wish it were called something else, because if you've rooted your phone, it will still be left with whatever custom ROM you flashed even after a Factory Reset.  

On the other hand, if Factory Reset does indeed wipe /boot, /system, and /recovery as well, especially /boot, what does it restore those from?  Do all phones come with stock images in a real internal ROM somewhere that it can re-flash those images from?  

I can somehow imagine manufacturers not wanting be burdened with the extra cost that such a spec for hardware-recoverable images might have cost them, so it got left out of the standard and left out of most phones, which is why it's so easy to brick them.  So, instead, they give you the option to wipe /data and /cache only, and call that a "Factory Reset" because you're not supposed to be foolish enough to root your phone in the first place according to their way of thinking.

Since rooting my Android and reading hundreds of posts, I've found that many of the terms I learned and accepted as a Computer Science grad student in the 80's don't quite mean the same thing anymore so I have to verify what everything really means before I do something.



Comments to this post answer the first part of my question.

But they don't really answer the second part of my question which is really a complaint:  Why call it "Factory Reset" if it doesn't really restore your phone to it's stock factory state?  

At this point, the question is merely rhetorical.  I think I already answered this in my question, unless someone can correct me.
On a non-rooted device we can group the partitions into two categories: the ones that can be affected by the user during normal runtime, and the ones that can't. The ones that can be are data and cache. The ones that can't are system, and boot. (Plus  recovery on some.)

"Factory reset" here means that the partitions that are affected by user activities are wiped clean. Thus when the user performs a factory reset, she is greeted with a phone that has no user data on it. If she updated her phone via official methods the updates are still there! So not even stock devices are reset to their factory state!

With the above in mind, let's look at custom ROMs. When you flash one, the updater-script wipes your system partition, then copies the contents of the zip there. What was previously there is now gone! There's no way you can get back to where you were before if you don't have a backup or an original system image.  

Now, when the user boots, technically, most everything is the same. During normal operation she can still only modify data and cache. So if you perform a factory reset it only makes sense to wipe these. Remember the original rom is now long gone!

You're right that the terminology is confusing; blame Google! It's been this way since the G1.