Why are they called "minifigs"?
The minifigure is so-called because the original LEGO "Family" figures that were released in 1974 where somewhat larger, with bodies made from 2x2 Bricks, and arms made from hinged tubes.



There's a bit more of a condensed history in the minifigure tag wiki, and there is a bit more information about the minifigure as we know it today in the Company Profile