dummy n.

Old English dumb, of persons, "mute, silent, refraining from speaking or unable to speak," from Proto-Germanic *dumbaz "dumb, dull," which is perhaps from PIE *dheubh- "confusion, stupefaction, dizziness," from root *dheu- (1) "dust, mist, vapor, smoke," also expressing related notions of "defective perception or wits." The -b has probably been silent since 13c. Related: Dumbly; dumber; dumbest. Of animals, "lacking in speech," hence "without intellect" (c. 1200).

The fork in meaning probably comes via the notion of  "not responding through ignorance or incomprehension." The Old English, Old Saxon (dumb), Gothic (dumbs), and Old Norse (dumbr) forms of the word meant only "mute, speechless;" in Old High German (thumb) it meant both this and "stupid," and in Modern German this latter became the only sense (the sense of "mute, speechless" being expressed by stumm). Meaning "foolish, ignorant" was occasional in Middle English, but the modern use in this sense (since 1823) seems to be from influence of German dumm, especially in Pennsylvania German.

dumb-cake ..., n. A cake made in silence on St Mark's Eve, with numerous ceremonies, by maids, to discover their future husbands. [Century Dictionary]

Applied to silent contrivances, hence dumb-waiter. Dumb ox "stupid man" is by 1756; dumb-bunny "stupid person" is college slang from 1922; dumb blonde "woman seen as incapable of comprehending anything complicated" is by 1936.

suffix in pet proper names (such as Johnny, Kitty), first recorded in Scottish c. 1400; according to OED it became frequent in English 15c.-16c. Extension to surnames seems to date from c. 1940. Use with common nouns seems to have begun in Scottish with laddie (1546) and become popular in English due to Burns' poems, but the same formation appears to be represented much earlier in baby and puppy.