If the nation that was redeemed from Egyptian bondage and experienced revelation at Sinai was known as the Israelites, or the Children of Israel, why are they now called “Jews”? After all, if we are the Children of Israel, shouldn't all Jews, not just natives or citizens of Israel, really be called “Israelis” or “Israelites”?
Two suggestions as to why Jews are called Jews:
1. The tribe of Judah is the tribe from which the Davidic dynasty arose (and from which the Messiah is destined to come). After the death of King Solomon, the nation split in two. The northern 10 tribes created their own independent Kingdom of Israel. The 2 southern tribes, Judah and Benjamin, became known as the Kingdom of Judah.
While both kingdoms were eventually conquered and exiled, the expulsion of the northern 10 tribes was permanent. The southern tribes, however, were only in exile for 70 years and the people then returned to their land. The area in which they dwelled became known as Judea and its people Judeans. In the flow of time and history, Judeans became Jews.
2. The Hebrew spelling of Judah is Yud - Hey - Vav - Daled - Hey. When the daled is removed, the remaining letters spell the Hebrew name of God. Therefore, the label Jew alludes to both Judah and to God and is a constant reminder of the relationship we have with the Divine.