was reading about the history of muds and game across this - i had always
taken this term for granted...
In Dr. Bartle's words:

When I took over programming MUD1, all objects except player characters were
static. I wanted some objects that did move, so I could use them for monsters
etc.. I needed a name, for programming reasons. I didn't want to call them
"monsters", though, because I could see their being used for non-monsters, eg.
helpful humans.

I decided to go with "mobiles" as a familiar form of "mobile objects" Thus,
mobiles were born. The name was passed down through generations of subsequent
virtual worlds, until in the late 90s people started shortening it to "mobs".
Thus, mob doesn't stand for Mobile OBject, it's a shortened form of "mobile",
which in turn is the quick name I gave to mobile objects in MUD1. "Man Or
Beast" is a retro-fit.