c. 1400, palestre, "ancient Greek gymnasium," from Old French palestre (12c.) and directly from Latin palaestra, from Greek palaistra "gymnasium, public place for exercise under official direction," originally "wrestling school," from palaiein "to wrestle, survive a wrestling match," which is of unknown origin (see discussion in Beekes) + -tra, suffix denoting place. The noun palē "wrestling" is a back-formation from the verb. Palestral "pertaining to wrestling or martial games, athletic" is attested from late 14c.
æ 1
digraph in certain Greek or Latin words; it developed in later Latin where classical Latin used separate letters. The Latin digraph also was used to transliterate Greek -ai- (as in aegis). When Latinate words flooded English in the 16c. it came with them, but as an etymological device only, and it was pronounced simply "e" and eventually reduced to that letter in writing (as in eon, Egypt) in most cases, excepting (until recently) proper names (Cæsar, Æneas, Æsculapius, Æsop). When divided and representing two syllables (aerate, aerial) it sometimes is written aë.