"crazy, silly," 1916, slang, of unknown origin, perhaps connected to potter (v.). Earlier slang senses were "easy to manage" (1899) and "feeble, petty" (1860).
1942, child's word for "chamber pot," from pot (n.1). Potty-training is attested from 1958. Potty-mouth "one who uses obscene language" is student slang from 1968.
potty little details