Why is patch leather called patch leather?

It's called "patch leather" because it sounds so much better than "leather scraps."

Patch leather is not a kind of leather but an assemblage made from leather scraps -- hence a patch leather bomber jacket today tends to sell for beneath $40 while a leather bomber jacket tends to start at $160 and go well up from there.

In other words, there is a somewhat strong correlation between what you'll pay and what you'll get.