In the early 20th Century, astronomers thought that the Milky Way Galaxy was the entire universe. In fact, they considered spiral galaxies, such as the Whirlpool Galaxy, to be spiral nebulae within the Milky Way. What could be the reason for this misconception?

Based on the scenario being described within the question it can be said that the most likely reason for this misconception would be that the spiral galaxies looked like clouds of gas and dust through telescopes because of their distance from Earth. During that time telescopes were still not as advanced and could only see so much, nowadays they are much more advanced and these galaxies are being analyzed and understood more clearly.