Tohster's answer is great. Vote for that one. But to address the 'mental model' aspect in another answer:
The reason the dial is the way it is is that it's not a thermostat. It's actually a 'power' dial ala a volume knob. This is why it's confusing. Contrary to Nathan's hypothesis, I'd argue the problem with these dials is that they don't adhere to a person's mental model.
If we're talking temperature, a user's mental model is a thermostat. Turn it higher to make your space hotter, turn it lower to make your space cooler. This is the opposite of the fridge dial.
If we're talking volume, a user's mental model is a volume dial on the radio. Turn it higher to make it louder, turn it lower to make it quieter. Again, the opposite of the fridge dial.
But there are dials where this does have a better correlation. A fan, for instance. Any fan with a dial control will match this mental model: the higher the humber, the more power (and, the cooler you'll feel).
So that's the actual problem, there is no one mental model that makes sense here. Yes, everyone has a fridge, but:
- people rarely adjust their fridge's temperature
- most fridges (aside from some modern ones) offer up no user feedback to tell you if you're making things warmer or colder.
So most of us have never formed a consistent mental model of how a fridge dial works like we have with plenty of other devices we use daily.
To answer the why was it designed this way? question, I can't. I don't know why. But my guess is the same as Tohester's. It wasn't designed. It was merely the decision of one person at one time that stuck it in there and the rest just followed.
Fortunately, things are getting better for us fridge owners. Many fridges today now have actual temperature controls:
This matches a universal mental model: higher number = higher temperature.