Middle English setlen, "become set or fixed, stable or permanent; seat, place in a seat; sink down, come down," from Old English setlan "place in a fixed or permanent position; cause to sit, place in a seat," from setl "a seat" (see settle (n.)). Compare German siedeln "to settle; to colonize."
From c. 1300 in reference to birds, etc., "to alight." From early 14c. of ground, etc., "to sink down, descend; cave in." By early 15c. (Chauliac) in reference to a liquid, "change from a disturbed or muddy condition to one of cleanness." By 1570s, of persons, "change from a disturbed or troubled state to one of security."
It is attested by 1520s as "become calm" (but c. 1600 it also could mean, colloquially, "knock down dead or stunned"). The meaning "decide, set or fix as by purpose or intention" is by 1620s. The meaning "secure title to (property, etc.) by means of a deed, etc." is from 1660s. It is attested by 1733 as "put beyond dispute or establish by authority or argument;" hence "resolve, determine, come to a decision (1782).
The sense of "establish a permanent residence" is recorded by 1620s; that of "plant with inhabitants, colonize" is by 1702.
The old meaning "reconcile" (a quarrel, differences, etc.) perhaps is influenced by or merged with Middle English sahtlen "to reconcile," which is from Old English saht "reconciliation," from Old Norse satt "reconciliation."
To settle down (intrans.) as what married couples do in establishing a domestic state is by 1835 (settle alone in this sense is by 1718). The transitive sense is by 1520s. To settle for "content oneself with" is from 1943; Middle English also used settle (v.) in an intransitive sense of "come down in the world, become lower in estate" (mid-14c.).
"long seat or bench with a high back and arms," 1550s, now archaic or obsolete (but compare settee), from Middle English setle "a seat," from Old English setl "a seat, stall; position, abode; setting of a heavenly body," related to sittan "to sit," from Proto-Germanic *setla- (source also of Middle Low German, Middle Dutch setel, Dutch zetel, German Sessel, Gothic sitls), from PIE *sedla- (source also of Latin sella "seat, chair," Old Church Slavonic sedlo "saddle," Old English sadol "saddle"), from root *sed- (1) "to sit."
1590s, "a thing that settles, fixes, or decides" (a debate, etc.); agent noun from settle (v.). Meaning "a person who moves into a new country to fix a residence there" is from 1690s.
1550s, of mental states, "quiet, orderly, steady;" by 1640s of objects firmly fixed or established;" past-participle adjective from settle (v.). The meaning in reference to matters in dispute, etc., "determined, decided, or agreed upon" is by 1570s; hence settled matter (by 1790), etc., implying no room for doubt or question. Related: Settledness (for which see settlement).
1620s, "act of clarifying, fixing, or steadying;" 1640s, "the placing of persons or things in a fixed or permanent position;" from settle (v.) + -ment. The meaning "a colony," especially a new one, "community of subjects of a state settled in a new country; tract of country newly colonized" is attested from 1690s; that of "small village on the frontier" is from 1827, American English.
The legal sense of "a settling of arrangements" (of divorce, property transfer, etc.) is from 1670s. The sense of "payment of an account, satisfaction of a claim or demand" is by 1729. The meaning "determination or decision of a question, etc." is by 1777.
Alternative settledness for "state or quality of being settled" (1570s) was "frequent in 17th c." according to OED. In late 19c., settlement also was used by Christian socialists for an establishment in a poor neighborhood where middle-class intellectuals live daily among the working class for purposes of cooperation and social reform, as better than charity in any case; hence Settlement House, etc.