On the menu you can set a room to be a "direct chat". But the side bar is using "People".
Keeping the same vocabulary would make it simpler to understand.
"Peoples"

"Direct chat"

In fact "direct chat" are a "1-to-1 room" but this room is not limited to only two account as we can add bot or alternate account. This need to be clearer.
Consistency ftw (though I think this does require some thought before converging on a single term).
Back here due to @ara4n's filing of the duplicate #5782:

I considered this for a while, and concluded that there is no wholly nice, small fix we can do without considering the problem of direct messages more generally.
I'm not a fan of the 'move to' semantics, esp. when they won't move anywhere if they're also a favourite/low priority.
How weird would this be?

There's a lot still wrong with the UX, but it maintains the consistency with 'Favourite' and 'Low Priority' and dodges any potentially misleading 'Move to' ideas.
I think "Direct Chat" or "Direct message" is what peoples are used too for more than 20-30 years...
Perhaps, what is strange in riot is that you can mark (or move) a room a "direct chat". I'm not sure about this features for the end-user.
In Discord you can also invite someone in a DM or in slack you can have bot in a DM... but DM stay DM and room/channel stay room/channel.
Anecdotal data point: I came here looking for an explanation of the "Direct chat" thing because it's confusing as well, since I had a "direct chat" with three people and one bot... If you ask me, this should be automatic (i.e. if there are more than two users, it's not a "direct chat" anymore).
We still have this issue, User Info says Direct message (verb)
Room list calls them People
This got iterated on sometime during the rebrand: The early room list called it Direct Chats but somewhere we reverted and I'm not sure why/where.
Cool, going to throw it into the pile then
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Consistency ftw (though I think this does require some thought before converging on a single term).