"in or at the back part of a ship" (opposed to forward), 1590s, from Middle English on baft (Old English on bæftan) "backwards." The second component is itself a compound of be "by" (see by) and æftan "aft" (see aft). The word has been saved by the sailors (the stern being the "after" part of a vessel), the rest of the language having left it in Middle English.
