1610s, "projecting, prominent, detached," from out- + standing (adj.) "having an erect position, upright." Figurative sense of "conspicuous, striking" is recorded from 1830. Meaning "unpaid, unsettled" is from 1797.
The verb outstand is attested in 16c. as "endure successfully, hold out against," now obsolete; the intransitive sense of "to project outward from the main body, stand out prominently" is by 1755 and probably is a back-formation from outstanding. Earlier were outstonden "to stand up" (mid-13c.); outstonding (verbal noun) "a prominence or protuberance" (early 15c.), but these seem not to have survived Middle English. Related: Outstandingly.