Britain's first armored fighting vehicles were named to hide what they were.
The word tank was already in English. It arrived in the 1610s for a pool or lake used for irrigation or drinking water, brought by Portuguese traders. Etymonline says the Portuguese took it from India, probably from a Hindi-region source, and notes a possible Sanskrit link. Merriam-Webster instead gives Portuguese tanque, an alteration of estanque, from estancar, "to stanch." The ultimate origin is unsettled.
In 1915 the word got a new job. Britain was developing tracked, armored vehicles under an Admiralty committee that Winston Churchill had helped set up in February 1915. Its early working name was "landship," which gave away the purpose.
A cover story was needed. The Saturday Evening Post reports that officials were to call the machines "Water Carriers for Russia," because the large hollow metal hulls looked like mobile containers. According to the same account, someone noticed that the abbreviation was "WCs," which could attract the wrong kind of attention, so the label became "Water Tanks for Russia." The article calls the story of Churchill himself spotting the abbreviation "probably apocryphal."
Etymonline gives a slightly different, more official version. A December 1915 memo to the Committee of Imperial Defence proposed the secret name "Tank Supply Committee." Cover names such as "cistern" and "reservoir" were also considered, and "tank" won because it was less clumsy and had only one syllable.
So there are two layers: a documented decision to use "tank" as a disguise, and a colorful water-closet anecdote that is hard to prove.
The vehicles first went into action on 15 September 1916 at Pozières ridge on the Western Front. Soldiers quickly adopted the name. "Tank-trap" is recorded by 1920.
The older meaning lived on as well. "Tanked" for drunk dates from 1893, and "to tank," meaning to fail, is recorded in 1967.