Why "ETH" in degrees awarded by ETH Zurich?

This seems to be historical. ETH is a university. Switzerland also has institutes formerly called Höhere Technische Lehranstalten (HTL), which are now called Fachhochschule.

The preconditions to enter the ETH and a Fachhochschule differ significantly. Finishing a degree at ETH used to take significantly longer, and the curriculum at ETH involved far more advanced mathematics.

Formerly the titles attained at a Fachhochschule was Dipl. Ing., Dipl. Ing HTL or Dipl. Ing. FH and the title you got at ETH was Dipl. Ing. ETH. As you guessed correctly, Dipl. Ing. ETH was a clearly superior different and more extensive education. The title from a Fachhochschule was roughly equivalent with a BSc while the title from ETH was comparable to a MSc from a competitive international university. This changed only recently, with the introduction of Bachelor and Master degrees in Switzerland a few years after the year 2000.

Nowadays graduates of a Fachhochschule usually get the title BSc, and graduates of ETH usually get MSc degrees, and have the option to cut their studies short and end them with a BSc degree, although last I heard it was still very unusual to do so.

While @Peters answer is correct on the historical aspect and the difference to the "Fachhochschule(n)", there is something missing:

The ETH Zurich and the EPF (Lausanne) are Federal Institutes of Technology. And while they technically are universities (as by the usage of the term outside Switzerland), the difference here is that ETHZ and EPFL are directy budgeted/lead by the federal government, while the other universities are budgeted/lead by the single cantons they are located in.

Both institutions are also the most prestigious Swiss institutes of higher learning in many of their technical degrees/educations.

Last but not least both EPFL and ETHZ are notorious for steep learning curves and filtering out many not-quite-talented-enough students (after first year generally 30% or so remain). I guess one of the reasons why the old ETH suffix is still around is also due to a fair bit of (not quite unfounded) elitism.