Comes from the term panoramic, which pertains to large visual scenes that can completely surround a subject. In film work panoramic shots require a camera to be “panned” across the landscape (or whatever the subject is). This terminology was adopted when two-channel (stereo) audio first arrived on the scene. In audio a pan control is used to position an audio track somewhere between the left and right loudspeaker in the stereo soundfield. A pan control generally works by simply reducing the level of a track in one channel, which makes it appear louder in the opposite channel. Modern designs are more sophisticated in their approach, but the basic concept has stayed the same: turn the pan pot to the left and that track comes out of the left speaker.
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