Quite simply, I don't understand why incumbent firms are called "incumbent" firms. I suspect everybody else knows, so please fill me in if you get a chance.

The term 'incumbent' in itself means quite a few things... so without the actual sentence or context of the subject it is hard to deciper the term. But as far as my guess goes as 'incumbent firm' means one of these 2 things -
1) Is a company that offers it's service in a particular field/ to a specific market. Basically it's a company that might have a strong hold in it's area of operations.
2) Is a dependent company - A company that depends upon some kind of organization/company... to operate.

I know that both the answers vary a lot, but like I said the term 'incumbent' in itself means a lot of things.
According to the dictionary it can mean either of 2
1. Holding an indicated position.
2. Resting, lying, leaning, or pressing on something.