The term "will-o'-the-wisp" comes from "wisp," a bundle of sticks or paper sometimes used as a torch, and the name "Will," thus meaning "Will of the torch." The term jack-o'-lantern (Jack of the lantern) has a similar meaning. In the United States, they are often called "spook-lights," "ghost-lights," or "orbs" by folklorists and paranormal enthusiasts.
Folk belief attributes the phenomenon to fairies or elemental spirits, explicitly in the term "hobby lanterns" found in the 19th century Denham Tracts. Briggs' A Dictionary of Fairies provides an extensive list of other names for the same phenomenon, though the place where they are observed (graveyard, bogs, etc.) influences the naming considerably. When observed in graveyards, they are known as "ghost candles," also a term from the Denham Tracts.
The names will-o'-the-wisp and jack-o'-lantern are explained in etiological folk-tales, recorded in many variant forms in Ireland, Scotland, England, Wales, Appalachia, and Newfoundland. In these tales, protagonists named either Will or Jack are doomed to haunt the marshes with a light for some misdeed. One version from Shropshire is recounted by K. M. Briggs in her book A Dictionary of Fairies and refers to Will the Smith. Will is a wicked blacksmith who is given a second chance by Saint Peter at the gates of heaven, but leads such a bad life that he ends up being doomed to wander the earth. The Devil provides him with a single burning coal with which to warm himself, which he then uses to lure foolish travellers into the marshes.
An Irish version of the tale has a ne'er-do-well named Drunk Jack or Stingy Jack who makes a deal with the Devil, offering up his soul in exchange for payment of his pub tab. When the Devil comes to collect his due, Jack tricks him by making him climb a tree and then carving a cross underneath, preventing him from climbing down. In exchange for removing the cross, the Devil forgives Jack's debt. However, no one as bad as Jack would ever be allowed into heaven, so Jack is forced upon his death to travel to hell and ask for a place there. The Devil denies him entrance in revenge but grants him an ember from the fires of hell to light his way through the twilight world to which lost souls are forever condemned. Jack places it in a carved turnip to serve as a lantern. Another version of the tale is "Willy the Whisp," related in Irish Folktales by Henry Glassie. Séadna by Peadar Ua Laoghaire is yet another version—and also the first modern novel in the Irish language.