Yes, "ankylosing" refers to fusion, and unfortunately the name given to the disease is not the best description of the disease...yet it remains the name nonetheless. Back when the name was given, the only way to really identify it was through fusion (why so many went undiagnosed).
I have zero fusion or joint damage, yet I have been given the diagnoses of "AS" by a competent rheumatologist.
There is some talk now of using new terms that are better suited, such as "axial spondyloarthritides" (SpA) for people who have the disease but no fusion, reserving the class term "AS" for only those with fusion.
Quote:
The term AS was introduced around 1900 at a time when a diagnosis could be made only on the basis of the clinical experience, without the help of imaging or laboratory results. The term axial SpA, covering patients early in the course of the disease and patients with a less progressive course, seems to be more adequate [3], whereas the term AS should be reserved for the more advanced 'ankylosed' phase of the disease.
Source: http://arthritis-research.com/content/11/1/208