child's name for a horse, also a toy horse or rocking horse, 1540s, a nursery word of uncertain signification.
c. 1200, palefrei (mid-12c. as a surname), "saddle horse for ordinary riding (opposed to a war horse), a fine, small horse for ladies," from Old French palefroi (11c., palefreid) and directly from Medieval Latin palafredus, altered by dissimilation from Late Latin paraveredus "post horse for outlying districts" (6c.), originally "extra horse," from Greek para "beside, secondary" (see para-) + Medieval Latin veredus "post horse; light, fast horse used by couriers," which is probably from Gaulish *voredos, from Celtic *wo-red- (source also of Welsh gorwydd "horse," Old Irish riadaim "I ride"), from PIE root *reidh- "to ride" (see ride (v.)). The Latin word passed to Old High German as pfarifrid, and in modern German it has become the usual word for "horse" (Pferd).
also hobby-horse, 1550s, "mock horse used in the morris-dance;" 1580s, "child's toy riding horse," from hobby (n.) + horse (n.). Transferred sense of "favorite pastime or avocation" first recorded 1670s (shortened to hobby by 1816). The connecting notion being "activity that doesn't go anywhere."
The hobbyhorse originally was a "Tourney Horse," a wooden or basketwork frame worn around the waist and held on with shoulder straps, with a fake tail and horse head attached, so the wearer appears to be riding a horse. These were part of church and civic celebrations at Midsummer and New Year's throughout England.