They are called earthbound because they are stuck in the astral realm - which is the plane of emotions. The emotional/astral plane is just next to the physical plane & anyone with self awareness knows how “emotionally” they can be attached to material things, so when we die , we are likely going to remain attached to the ghostly remnants of what we once knew in the physical plane. - i.e.: “earthbound”.
Being earthbound is also akin to saying that the entity also is being trapped by their “false emotions” - which, basically, are the emotions that “falsly” attach us to that which we are both “more familiar with” & that which is “not as pure” - we become the emotional being through our attachments to ego rather than to our spirit , and this keeps us tethered to the lower vibrational planes.