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Does the word butterfly derive from transposition of word order, i.e., "flutter by"? Several dictionaries that I looked this up in so long ago that I've forgotten which ones, said either "origin unknown" or referred to butter, or German or Dutch words for butter, which doesn't seem to make sense, in that butterflies seek to ingest flower nectar, not butter.

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Concerning the etymology of 'butterfly', several theories have been proposed. Ernest Adams in Notes and Queries, June 24, 1876, pp. 516–7, first observes that the second element of the word poses no particular etymological difficulties, then ably summarizes the theories:

The following theories have been advanced. Skinner writes, "nobis sic dictus ob levitatem fere butyraceam alarum hujus animalculi," because its wings are as smooth as butter. An earlier authority, Kilian (Etym. Teut. Ling., 1605), imagines that it was so called from the fact that its excrement resembled butter; basing his theory doubtless upon one of the Dutch names mentioned above. And this theory has been sanctioned by one of our ablest philologists, Mr. Wedgwood. Grimm suggests that the name was given, "weil man glaubte dass Schmetterline, oder Hexen in deren Gestalt, Milch und Butter stälen," because "they, or witches in their shape, stole milk and butter." Another theorist would explain the name by the fact (?) that butterflies are of the colour of butter, and yet another because the insects appear at the time when butter is made.

Adams (an amateur lepidopterist), then continues:

All these theories are felt both by the philologist and the lepidopterist to be eminently unsatisfactory. ... As one who loves these insects, I may perhaps be pardoned if I venture to add one more speculation to the unsatisfactory roll.

I find Adams' "speculation" more consistent and plausible than any of the other theories proposed:

 There existed in our early mother tongue a common word which Saxon lexicographers seem to have neglected to register in its simple form, buda. It means the larva of an insect, and was applied, with no great entomological precision, to those forms of animal life popularly known as "grubs," maggots, caterpillars, worms, and, still more loosely, beetles. In an old Saxon vocabulary I find the common dung-beetle indicated thus, "Scarabꬱus, scearn-buda, budda." This is the earliest instance I have met with of the word in its independent form. It is frequently found as an element in the compound names of insects in early English literature and in our provincial dialects—e.g. "Hic multipes, a wel-bode (i.e. a woodlouse)," in a Nominale of the thirteenth century. "Bood-eaten" or "bowd-eaten" malt (Prov. E.) is maggot-eaten malt. It occurs in the forms bude, bode, bede, bed, bit, bet, bot, but. In the form "bots" it was, and still is, well known. "Bots or wormes that are in horses and in the bodies of oxen and kine" (Topsell, Serp., p. 815). Not to encroach unduly on your space, I will merely suggest that butt-er-fleoge or butt-er-fly is simply the fly from the grub or caterpillar—an explanation that has at least the advantage of being true in fact and, perhaps, plausible in theory.
 One word as to the suffix -er. I would compare it with the -er in "cat-er-pillar." I believe it to be the common suffix of diminution seen in splint-er, whisp-er, &c.
 I will conclude with a query. In the western counties a chrysalis is sometimes called a button. Is this another form of butt-er, with the diminutive suffix -on or -en, instead of -er?

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    Fascinating. So in short, "buda" quite simply means grub or larvae, and the schmetterling is a flying one of those - ingenious and straightforward. {Just regarding "buda", indeed quite simply "bug" is suggested to be possibly from "buda", by some etymological notes on it.} Thanks for this. – Fattie Jun 10 '16 at 12:25
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    @JoeBlow, the Promptorium Parvulorum ("The first English-Latin Dictionary", 1440) shows "Budde of a tree," glossed as Latin "gemma", then the next entry is "Budde flye", with no gloss. I don't know quite what to make of that. I'm not alone: the text is often rendered "Budde, flye", with a comma silently inserted by later editors. That's a short 'u' in 'budde'. – JEL Jun 11 '16 at 9:20
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    Good Lord! TBC "Flye" is not particularly a Latin word, right? (ie, it's unlikely they were saying "english Budde -> latin Flye"). What a mystery. – Fattie Jun 11 '16 at 12:24
  • @JoeBlow, No, not surprisingly, a search of all the Perseus Latin text (including dictionaries) doesn't turn up 'flye' or 'fly'. Also, the font used (sans, small caps; e.g., Albert Way ed., 1843) indicates the whole is considered a headword by that editor. – JEL Jun 11 '16 at 17:18
  • OK. so the author was just stating "Budde flye" is a word or term; and giving no definition, no gloss. But it's right next to "budde of a tree" so it makes us think they are buddes all together; in that era the word to them was budde-flying. Wow. – Fattie Jun 11 '16 at 17:24

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