I don’t know for sure where the idea comes from and can only speculate. There may be several reasons. One, people tend to equate angels with heavenly residents, especially Christians who are not Catholic and have little understanding of the communion of saints. Two, it is hard to imagine what life will be like after death, but before the resurrection of the body, during a time when we will be disembodied souls. Angels give us a point of reference for creatures who exist without bodies. Finally, especially when the deceased is young or in some other way especially innocent, angels seem to capture the sense of innocence and purity the deceased is presumed to have.
As you note, the belief that humans become angels at death is erroneous, but the belief that they do should not be considered absurd. It is simply a way that some people have had to try to understand what happens after death. It is an incorrect understanding, but not an entirely unsympathetic understanding.
