early 14c., "read letter by letter, write or say the letters of;" c. 1400, "form words by means of letters," apparently a French word that merged with or displaced a native Old English one; both are from the same Germanic root, but the French word had evolved a different sense. The native word is Old English spellian "to tell, speak, discourse, talk," from Proto-Germanic *spellam (source also of Old High German spellon "to tell," Old Norse spjalla, Gothic spillon "to talk, tell"), from PIE *spel- (2) "to say aloud, recite."
But the current senses seem to come from Anglo-French espeller, Old French espelir "mean, signify, explain, interpret," also "spell out letters, pronounce, recite," from Frankish *spellon "to tell" or some other Germanic source, ultimately identical with the native word.
Related: Spelled; spelling. In early Middle English still "to speak, preach, talk, tell," hence such expressions as hear spell "hear (something) told or talked about," spell the wind "talk in vain" (both 15c.). Meaning "form words with proper letters" is from 1580s. Spell out "explain step-by-step" is first recorded 1940, American English. Shakespeare has spell (someone) backwards "reverse the character of, explain in a contrary sense, portray with determined negativity."