For now, only AY is managed, but maybe YM will be. So I won’t use AY or YM as an instrument type. “FM” is “Frequency Modulation”, which, I believe, quite matches what the PSG is doing? I didn’t lie by say “FM Synthesis”, so there is no synthesis :).
“AY/YM” is still a better term (the traditional Spectrum/Amstrad AY chip is completely register compatible with the YM2149, and will output the exact same sound given the same input).
Obviously it’s your choice. But I will hold you responsible if we get chipmusic noobs in the Atari ST IRC channels talking about “FM sounds” on the ST 🙂