Everyone here sorta answers the questions but not entirely. So KDE started back in the 1990s as K Desktop Environment as a play on the Common Desktop Environment. The K was originally suggested as standing for Kool buy I guess others in project didn't think that was very kool and it was left officially as just K.
As to why Plasma - when KDE 4 was released, "Plasma" replaced Kdesktop shell and whatnot and was named Plasma because plasma evokes dynamic fluidity like plasma or some such lol. Unfortunately I can't find anything easily on the interwebs that shows how it got it's name :/
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