No one knows for sure where the word "dixie" originated. Some believe that it was a shortened nickname referring to the Mason-Dixon Line, while others think it came from ten-dollar notes that were widely used and issued from Louisiana ("dix" is French for "ten). By the 1850's, the term "dixie" was directly associated with the South.
The song "Dixie's Land" is commonly believed to have been written by Daniel Emmett, although others emerged who contested this. The melody became popular in black face minstrel shows, and after the start of the War Between the States, became the Southern anthem. (The North felt as though it needed an anthem as well, so it adopted the "Battle Hymn of the Republic, which I will discuss further next week.) Many variations in the lyrics appeared at this time, as was common practice back then. The song was played at both Presidents Lincoln and Davis' inaugurations. It was a favorite of Lincoln's, who also requested that the song be played during the Grand Review after the war was over. And, of course, it was played at Emmett's funeral.
Unfortunately, during the Civil Rights Movement of the 60's, "Dixieland" became associated with negative, racist implications, rather than having been considered as an important piece of history, ancestry, and Southern heritage. Recently, it was banned from being played at Ole Miss sporting events. When local school children in Mississippi were asked if they knew the song, none of them recognized it. Personally, I think that's a shame.