Do they call bands like Hum and My Bloody Valentine "shoegaze" because of all the effects pedals and stuff? Essentially, "gazing at their shoes while they play?"

I think you're right...I haven't heard the actual reason though. I've also considered that a lot of it is sort of melancholy music where you just sort of have your head down.

I think your theory is more accurate though.

It might be a variety of both...which would make for a much more interesting explanation.

The music is so depressing because they have to look at their petals all the time and miss the reaction of their fans?

Never heard the effect pedals explanation, but that would also fit in with why I've only heard it has to do with just standing there looking down.

Haha no, I mean as two seperate explanations but they both work in the same title. Looking at effects pedals for the bands and the crowd just peering at their feet.

"Shoegazing is a genre of late '80s and early '90s British indie rock, named after the bands' motionless performing style, where they stood on stage and stared at the floor while they played."

All Music Guide, "Shoegazing"

Yup, I've always heard the myriad of pedals caused for the constant looking down.