How are function name abbreviations of a chip conceived?
If you just do first letter of each word, you usually end up with a) non-unique identifiers and b) non-informative names. From your examples:


XTAL1: Difficult to use C for "crystal" as it's more widely used for capacitor. X is possibly from the Greek abbreviation of Christ (X), so ChrisTAL. [see comments]
MISO: Describes the direction for each device, which can be ambiguous otherwise.
AVCC: Analog, VCC. VCC comes from V-Collector-Collector from (older) bipolar devices where the collector is usually at the highest voltage.
RXD: RX is a very common abbreviation for receive. RXD is then Receive Data.


In your own designs, as long as it's documented and provides some guidance as to what the pin does, it's fine. If it's been done before in another design, keep using it. It'll make your designs easier to understand for you and others. As the comments say, there's nothing particularly special but I think it helps to have consistency and some guidance for a knowledgeable reader.