The origin is exactly what it sounds like (buttorfleoge) in Old English is butterfly. Why they got the name is not certain. Suggestions include the yellow color of one of the commonest species, the belief they would feed on freshly-churned butter, or the color of their excrement have all be proposed.

My Webster's says that it dates from before the 12th century and comes from middle or old English alluding to the fact that some butterflies are attracted to buttermilk; ie the fly that is attracted to buttermilk. Mythology had it that witches took on this form to steal milk.  The German word Schmetterling has a similar origin in that "Schmetten" means cream.  There are also several old German dialect words, such as 'Milchdieb' (milk thief), which have the same connotation.

I prefer the English urban myth version which refers to the greenish-yellow coloured Brimstone butterfly, Gonepteryx rhamni, which is one of the first  on the wing in the spring in Europe, and from which the name butter-coloured fly is derived.