"mid-day repast, small meal between breakfast and dinner," 1786, a shortened form of luncheon (q.v.) in this sense (1650s), which is of uncertain origin; it appears to be identical with an older word meaning "thick piece, hunk" (1570s), which perhaps evolved from lump (n.) [OED]. There also was a contemporary nuncheon "light mid-day meal," from noon + Middle English schench "drink." Old English had nonmete "afternoon meal," literally "noon-meat." The verb meaning "to take to lunch" (said to be from the noun) also is attested from 1786:
PRATTLE. I always to be ſure, makes a point to keep up the dignity of the family I lives in. Wou'd you take a more ſolid refreſhment?--Have you lunch'd, Mr. Bribe?
BRIBE. Lunch'd O dear! Permit me, my dear Mrs. Prattle, to refreſh my sponge, upon the honey dew that clings to your raviſhing pouters. O! Mrs. Prattle, this ſhall be my lunch. (kiſſes)
["The Mode," in William Davies' "Plays Written for a Private Theatre," London, 1786]
As late as 1817 the only definition of lunch (n.) in Webster's is "a large piece of food," but this is now obsolete or provincial. OED says in 1820s the word "was regarded either as a vulgarism or as a fashionable affectation." Related: Lunched; lunching.
Lunch money is attested from 1868. Lunch-time is from 1821; lunch hour is from 1840; lunch-break is from 1960. Slang phrase out to lunch "insane, stupid, clueless" first recorded 1955, on notion of being "not there."