Why is List(T).Clear O(N)?

As far as I'm aware the current implementation just calls Array.Clear on its internal T[] array, and Array.Clear is an O(n) process. (As Hans points out in the comments, the MSDN docs are correct that the n in this case is the list's Count, not its Capacity.)

But, even if it did just allocate a new T[] array internally, that would still be an O(n) process because allocating an array of size n involves initialising all n elements to their zero/null/default state.

Of course, there's nothing to stop some sort of internal trickery where the array could be initialised with length 0 or 42 or whatever and then auto-expanded again on-the-fly as required, amortising the overall O(n) cost.

Because the implementation of List<T>.Clear() calls Array.Clear() on the list's backign array, and per the documentation that method sets all of the elements of that array to null.

I would guess that the reason why the existing array is cleared instead of a new one being created is that the .NET team determined that it was more efficient to clear an existing array instead of allocating a new one. Allocating a new array also takes time/memory so it's a tradeoff that tries to optimize for the common usage scenarios.