"magnetically polarized oxide of iron," 1510s, literally "way-stone," from lode + stone (n.). So called because it was used to make compass magnets to guide mariners. Figurative use from 1570s.
1811, in optics, from French polariser, coined by French physicist Étienne-Louis Malus (1775-1812) as a term in optics, from Modern Latin polaris "polar" (see polar). Transferred sense of "to accentuate a division in a group or system" is first recorded 1949 in Arthur Koestler. Related: Polarized; polarizing.