The modern term 'iaido' appear first in 1932 and consists of three kanji
characters
居 (i), 合 (ai), and 道 (dō)
The origin of the first two characters,
iai (居 合),
is believed to come from the saying
Tsune ni ite, kyū ni awasu (常に居て、急に合わす),
that can be roughly translated as "being constantly
(prepared), match/meet (the opposition) immediately".
Thus the primary emphasis in 'iai' is on the psychological state of being
present (居).
The secondary emphasis is on drawing the sword and responding
to the sudden attack as quickly as possible (合). but in the
appropriate way (thus the use of the kanji for harmony).
The last character, 道, is generally translated into English as
" the way ".
The term 'iaido' approximately translates into English as
"the way of mental presence and immediate and appropriate reaction".
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