I don’t know the origin of Idly but I have read this online sometime ago. This is from Periyava blogs. He gives reasoning about why we can it ‘Idly’. The term iduthal (in Tamizh) refers to keeping something set and untouched. We call the cremation ground idukaadu (in Tamizh). There we keep the mrta shariram, mortal body, set on the burning pyre and then come away. The term iduthal also refers to refining gold with fire. The (Tamizh) term idi marundhu has a similar connotation: a drug given once without any repetition of dosage. In the same way, we keep the idly wet flour on the oven and do nothing to it until it is cooked by steam.