1520s, "thinly, scantily," from rare (adj.1) + -ly (2). From 1550s as "seldom, not often;" the sense of "finely, excellently" is by 1580s.
Entries linking to rarely
rare adj.1
[thin, few, unusual] late 14c., "thin, airy, porous" (opposed to dense); mid-15c., "few in number and widely separated, sparsely distributed, seldom found, very infrequent;" from Old French rer, rere "sparse" (14c.) and directly from Latin rarus "thinly sown, having a loose texture; not thick; having intervals between, full of empty spaces" (antonym of densus). Sometimes reconstructed to be from a PIE root *ere- "to separate; adjoin."
"Having the particles not close together," hence "few in number," hence, "unusual." Sense of "remarkable from uncommonness," especially "uncommonly good" is from late 15c. (Caxton). Related: Rareness. In chemistry, rare earth is from 1818.
Rare implies that only few of the kind exist : as, perfect diamonds are rare. Scarce properly implies a previous or usual condition of greater abundance. Rare means that there are much fewer of a kind to be found than may be found where scarce would apply. [Century Dictionary, 1895]
-ly 2
common adverbial suffix, forming from adjectives adverbs signifying "in a manner denoted by" the adjective, Middle English, from Old English -lice, from Proto-Germanic *-liko- (cognates: Old Frisian -like, Old Saxon -liko, Dutch -lijk, Old High German -licho, German -lich, Old Norse -liga, Gothic -leiko); see -ly (1). Cognate with lich, and identical with like (adj.).
Weekley notes as "curious" that Germanic uses a word essentially meaning "body" for the adverbial formation, while Romanic uses one meaning "mind" (as in French constamment from Latin constanti mente). The modern English form emerged in late Middle English, probably from influence of Old Norse -liga.