The canonical explanation is that Civi comes from "civil society", ie " "aggregate of non-governmental organizations and institutions that manifest interests and will of citizens."
Over the years, I've heard various other explanations, one is that Dave and Lobo are extremely polite borderline canadian, so when they built a crm, they wanted it civil.
After the first civicon, at the end of a long night involving lots of tequila shots, I've heard a sinister plot that Dave is an 5-star general in the army that is going rogue and wants to take control of the UN. According to the legend, the cividog has fought back and protected the civilians. Those knowing Dave (or Scout) would take that explanation with a pinch of salt.