Yeahh.. It was known as the ultimate religion(Sanatan in Sanskrit) in the ancient times...
My views why it was (is) called so.....
1) - It connects people with reality... In our religion, the central goal is to achieve Salvation.. (Moksh ki prapti)..
Likewise, in our lives we are continuously working to attain something or to achieve our particular goals.. So we can relate it our religion's central goal...
2)-What makes it ultimate is the number of its followers... It is followed by many many millions of people..
3)Its central philosophy is of Non Violence.. It teaches us to have mercy... Which is must for our world to continue....
4)Purity of heart, Cleanliness and truthfulness are some other beautiful teachings in our religion.... Which makes it most beautiful and ultimate religion...
Its supermacy is also verified by Science...
The theory of relativity by Einstein... matches with the brahm and aatman concept already given in our religion...

These are my personal views.. Pls give feedback and improve my answer...

Sanatan was the only religion in ancient times.but bcoz ofdifferent mindsets different mindset different religions came up..yes sanatan and Hinduism have similarities in their teaching..this was the best way to devote to GOD as there was no discrimination /violation on the basis of religion..yes different religions has increased the diversity of india..but also it has many disadvantages /harm to the ppl....disadvantages like discrination /non violence...and many others..
this what I think..