The WTS tells us God needs a name to distinguish himself from all of the other gods out there.
As naive as that may sound, it correctly points to the only religious setting where a "divine name" makes sense: polytheism.
Once official Judaism shifted to monotheism (there is only one God) "Yhwh" turned to be an embarrassing vestige of polytheism. A god needs a name, "God" doesn't.
So what to do with it? Just what official Judaism has done: (1) declare it too sacred to be uttered; (2) explain it away theologically or philosophically, as meaning "something" ("I am that I am") instead of pointing to "somebody".
This paved the way for lasting underground magical use of the name (as many ancient papyrii and middle-age treatises attest) and for some theologically shortsighted sect to dig it up and make it its own label.