Its a dongle as its hardware that connects via USB.
Correct term is a Mobile Broadband Dongle.
You can get wi-fi, bluetooth and even tpm dongles and dongles that have a serial in the actual hardware of the dongle for top end software.
Sales people cant be bothered to call them mobile broadband dongles all day long, thus they just call them dongles, thus the mass public start thinking a dongle is something that gets you on the web from your laptop on the move.
I remember been in sales, people used to come in for a memory stick, and it used to be a toss up if they was asking for a Pen-Drive or Sony MS.
As for using a phone, its 100% fine as long as your sim package includes a data allowance as three tell me that if i connect via my phone to the internet it goes via a different server to if i connect via my laptop with my phone, dont know how that figures, but they offered me a package to allow me to ues my phone as a modem with 3gb data allowance for £5 as i moaned, but i bet its a standard package.