What is the meaning of 方 in 方向？
「方」 originally meant side, surroundings > surrounding area. Before compass directions were invented, one of the ways to refer to a direction was through nearby landmarks or surrounding villages/states, and hence 「方」 also carries the meaning direction, now surviving in words like 「東方」, 「西方」, etc.

You can therefore treat 「方向」 as a word where both characters carry roughly the same meaning (as is common in Chinese).



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「方」 (Baxter-Sagart OC: /*paŋ/) is a derivative of 「亡」 (/*maŋ/, blade tip, now written as 「鋩」). Both 「方」 and 「亡」 come from an additional mark drawn on 「刀」 (picture of a knife/blade/weapon). The meaning side, surroundings is either a phonetic loan (rebus) or semantic extension; 
 compare 「劃」, which uses a knife 「刀」 to draw boundaries 「畫」.

「方」 extensively appears in Shang Dynasty oracle bones as part of state names surrounding the Shang state, and these state mentions serve as an invaluable record of Ancient Chinese interstate relations. Collectively, these states are called 「方國」.



References:


季旭昇《說文新證》
小學堂
國學大師


郭沫若《甲骨文合集》
中國社會科學院考古研究所《殷周金文集成》