Duolingo really likes literal translations - and if you translate this as "Mediterranean sea", you can see the link between môr and "sea". It's a course for learning Welsh after all, and allowing sentences that refer to the same concept while being only loose translations doesn't necessarily do much to help that.
I think it may also possible to refer to y Canoldir in Welsh alone as well, so whatever the translation, it's a good idea to have some indication that the word Môr is there.
Wiktionary lists it as a derivative at least: https://en.wiktionary.org/wiki/Appendix:Proto-Indo-European/ters- (include final dash)
I've always thought of the Latin name to be a simple adjective: "the sea that is in the middle of the earth" -- so, not necessarily named after some place called "Middle-Earth".
The Welsh, though, is more explicitly "The Sea of 'Mediterranea'" (GPC glosses that sense of canoldir as "the Mediterranean lands")
Interestingly enough, the same word can apparently also mean "the Midlands (of England)".
I suppose that means I have a Mediterranean father :)