1610s, "bowl-shaped mouth of a volcano," from a specialized use of Latin crater, from Greek krater "large bowl from which red wine mixed with water was served to guests," from kera- "to mix," from PIE root *kere- "to mix, confuse; cook" (see rare (adj.2)).
The extension to volcanoes began in Latin. The literal classical sense is attested in English from 1730. Applied to asteroid scars on the moon since 1831 (they originally were thought to be volcanic) and later extended to other planets. Meaning "cavity formed by the explosion of a military mine" is from 1839. The Battle of the Crater in the U.S. Civil War was July 30, 1864.
As a verb, "having a crater or craters," by 1848 in poetry, 1872 in scientific writing. Related: Cratered; cratering.