I don’t understand .ly (and other cutesy TLDs)

Bit.ly, diagram.ly, owl.ly,instagr.am, chronolo.gy, del.icio.us (the worst offender of the lot!); cutesy “domain hacks” like this just give me a low-level burn of distaste. What exactly does “Diagramly” mean? Or “Bitly”? In the fashion of a bit? Wouldn’t diagramm.er have been a better choice, since at least that means something? (Yeah, you can have that for free, diagram.ly) Or is it just the need to stick “.ly” on your domain name as the not-so-secret handshake that shows you’re a hip Hacker News-reading kind of guy?

I understand that the .com domain is pretty thoroughly squatted these days–diagram.com is squatted, for instance. And bit.ly sort of makes sense because it’s a URL shortening service and you’ll mostly be pasting links to it rather than trying to say a site name. But seriously, have you ever tried pronouncing some of these names in a way that actually conveys the proper spelling of the domain? “Dell dot icky-oh dot you ess”, “chronolo dot gee why”, “insta-grr dot ay em”… the only redeeming quality is that they contain “icky”, “gee why”, and “grr” in the pronounciations, all words that come to mind when trying to deal with these damn things.