late 13c., "musical instrument, mechanical apparatus for producing musical sounds," from Old French instrument, enstrument "means, device; musical instrument" (14c., earlier estrument, 13c.) and directly from Latin instrumentum "a tool, an implement; means, furtherance; apparatus, furniture; ornament, dress, embellishment; a commission, authorization; a document," from instruere "arrange, prepare, set in order; inform, teach," literally "to build, erect," from in- "on" (from PIE root *en "in") + struere "to pile, build" (from PIE *streu-, extended form of root *stere- "to spread").
The word in other Germanic languages also is from French. In English the meaning "a means, an agency" is from mid-14c. The sense of "hand-tool, implement, utensil, something used to produce a mechanical effect" is from early 14c. "Now usually distinguished from a tool, as being used for more delicate work or for artistic or scientific purposes" [OED]. The legal meaning "written document by which formal expression is given to a legal act" is from early 15c. Formerly also used of body parts or organs with special functions.
In wyfhode I wol vse myn Instrument As frely as my makere hath it sent. [Chaucer, "Wife of Bath's Prologue"]
early 14c., "a piece of cloth," especially a rectangular piece, from Old French panel "piece of cloth, piece, saddle cushion" (Modern French panneau), from Vulgar Latin *pannellus, diminutive of Latin pannus "piece of cloth" (see pane).
Anglo-French legalese sense of "piece of parchment (cloth) listing the names of those summoned to serve upon a jury" led by late 14c. to the meaning "a jury selected for a trial." General sense of "persons called on to advise, judge, discuss," etc. is from 1570s. Sense of "more or less distinct part of the surface of a wall, door, etc." is recorded from c. 1600.
Panel-house (said to be from 1840s; popular from 1870s) was old slang for a disreputable place (typically a bordello) with panneled rooms. At least one panel could be slid back to allow for thefts from customers and other cheats. Hence panel-thief, panel-game, etc.
The requisites for a "panel house" in the proper sense, are,—a crafty, cunning street walker; a not less cunning and at the same time sturdy scoundrel—known in the slang of the business as a "Badger," and a room prepared specially for the purpose by having a small invisible opening, generally a noiselessly opening panel in the partition or entrance door, by which access to the place can be had from an adjoining room. These three requisites obtained, it becomes the duty of the panel-thief to find the fourth in any "greenhorn" that can be picked up on the streets and induced to come into the apartment. ["The Dark Side of New York Life and its Criminal Classes," 1873]
also paneling, "the making of panels; panels collectively," 1800, verbal noun from panel (v.).