ESPHome recompilation for device name: is that necessary?

This may be already answered. If so please let me know the thread.
I have been re-compiling code for all my new ESPHome devices such as Kauf plugs and ESP32
switches with an entity name that matches its function (e.g. Compressor, Hot Water Pump, Porch lights) because otherwise they all show up as “Kauf Plug” or some other unhelpful name when I plug them in and look at the automated integration stuff in HA. I know I can change the friendly name but I’m not sure that works for use in automations etc.

What should I be doing instead? Or is this a good idea what I’ve been doing?

A sensible friendly name for display and a sensible entity_id for use in automations.

Both can be accomplished by changing the name: of each component in ESPHome.