(a man's name). A contraction and diminutive of Mine Edward-Mine Eddy, My N'Eddy. Teddy is the French tu, toi, form; and Neddy the nunation form. (Ed', Ted, Ned.)
“The `Set-down' was succeeded by the Noddy, so called from its oscillating motion backwards and forwards.” —Sketches of Ireland (1847).
Source: Dictionary of Phrase and Fable, E. Cobham Brewer, 1894