Linux defaults in 1994: fvwm, rxvt, color (in ls and rxvt), Emacs, Seyon, less. Unix defaults in 1994: twm (or mwm if you were really unlucky), xterm (huge memory hog), black and white, vi (not Vim!), cu, and a more where you couldn't scroll backwards. Also remember term? You could get, approximately, an internet connection through a dialup shell account on Linux, by the simple expedient of recompiling all of your networking software to use term.
When I started using IRIX in 1994, ls to a terminal defaulted to single-column output; find . -follow -print on a directory with symlinks up the hierarchy would infinite-loop; find defaulted to starting from no directories and not doing anything with the files it found; etc. It had a much prettier GUI and 3-D acceleration, though.
Remember also that at the time Microsoft OSes shipped with no TCP/IP support.
Also, Linux was appealing for hackers, as even today, it's harder to contribute to BSD, having a more centralized development methodology than Linux.
Linux is a better target for companies like Canonical or Red Hat because of the GPL.
BTW, this is why Linux is a better target for companies like IBM, HP, SGI, Oracle and so on: because when they contribute something they can expect to get all other contributions in return. There is no such guarantee in BSD.
And yes. The AT&T lawsuit did not improve BSD's prospects a bit.
Linux won the hearts of many in mid and late 90's because it was VASTLY better than the mainstream OS back then. That Linux was the first many tried before other possible things (minix, bsd, plan9, etc.) most of all was because of the name.
Yes. The name. Linux sounds cooler than any of the other alternative OSs, and therefore it won them.