"Kalimac" was his name in hobbitish, which usually was shortened to "Kali" by those who knew him. "Kali" meant "joy" in Westron, so when Tolkien translated that to English, he came out with "Merry".
Anyway, this is my current understanding on the naming of Master Brandybuck; but I am certainly no expert on any language, especially not those from the Professor's imagination. I have enough trouble with my own Americaneese.
