I wrote the following in response to a question on Quora When and why did the word “Oriental” become offensive?
Orientalism as an area of study in the west was generally concerned with observing and interpreting the east, its customs, and its culture.
It took hold of the Western imagination when some of the first east-west interactions took place and really took off, spawning such offshoots such as Indology (it converted India into an object of curiosity) in the long run. Western scholars brought their own (Western) understanding to bear upon eastern matters and often ended up with gross misinterpretations.
The damage it did was that it very clearly established the divide between the West and the East. The East was seen as the “other” and became exoticised. The East was turned into something under a microscope and as a result, perhaps felt dehumanised.
Even more damage was done when, after a thorough Europeanisation, native populations of the east began looking upon themselves through Western eyes. Sometimes they felt ashamed of being themselves. Sometimes they aspired to a West-like sophistication and abandoned their own ways.
Hence, the word Oriental is somewhat loaded. I am not sure everyone who minds it does it for the reasons I suggested above, but the word does seem to belong to an age when east-west cultural understanding wasn’t as mature as it is today.