Earlier quoted context omitted.
Damages is a legal term of art that implies a finding of fault in a judicial proceeding and a corresponding award by the court/arbitrator/etc. This is not that: no fault/guilt need be admitted (though it was here). It's just a contract to accept a certain amount of money and in exchange to not proceed with a lawsuit.
While I agree it is a little misleading, websites do not have to use the legal definitions of words. If they said "Twitter 'troll' settles to pay six-figure sum in damages" Then it would have been fine, with no confusion.
1) The word "troll," for example. That invokes a specific meaning of an individual who deliberately provokes strife for the sake of it. A heated disagreement may be deeply unpleasant for one or both parties, but we do not normally understand the actions of either party to be "trolling."
2) The word "damages" is generally taken to mean compensation decided by a judge or jury following a verdict. It appears that this was an out of court settlement without admission of liability. There can be many reasons apart from genuine liability for which a party may opt to settle.