Simple:
Keto is short for ketosis, or the ketogenic diet. When carbs are restricted enough your liver will produce a new type of energy called a ketone, when it does you are said to be in ketosis and a diet that does this is ketogenic.
OK, so?
The so is that a ketogenic state forces our liver to make ketones from fat. so instead of eating sugar for energy we can create it ourselves from the fat we have stored on our body. For most people this is a very good thing.
It is important to understand that this is nutritional ketosis, something we do on purpose with our diet and not related to a dangerous condition called ketoacidosis. These have nothing to do with each other outside of the word keto used in the name.
Harder:
On a standard diet, your body runs primarily off of glucose from your blood, these are sugars/carbohydrates. This glucose in your blood is commonly called blood sugar as in my blood sugar is low.
Your muscles, organs and brain all run off of glucose. In Ketosis however, your body produces ketone bodies (more commonly just ketones) that most of your body can use in place of glucose.
If ketones provide energy like glucose, why switch diets? Answered here.
I will link to another post regarding insulin, but insulin control is another very good reason to keto.