I think most people get it intuitively without thinking too much about it.

It's software that is tied to the hardware, in the old days most commonly on ROM, which makes it "firm".

Also as many mention, it's tied to the hardware by the "firm" that made the hardware, although I think that is more accidental, it kind of works for the logic too IMO.

It's such a brilliant term that most people generally have an intuitive idea about what it means, without an actual explanation. Today though it's a bit more murky where the line is drawn between software and firmware, since much firmware is distributed through the OS and Drivers, and can be changed on the fly.