(Aztec: "warm drink" or "warm liquid" - an alternate etymology derives the word from the Nahuatl word xocoatl, "bitter water")
When Hernando Cortez arrived in, and conquered, the Aztec Empire, in 1519-1520, he found the Aztec Emperor Montezuma drinking a strange beverage, hitherto unknown to Europeans. This beverage, called chocolatl (made from cocoa beans), was highly regarded by the Aztecs, and when Montezuma offered some to his "guests", Cortez and his men, it was considered a signal honour.
Though Cortez no doubt appreciated the gesture, chocolatl was not to European taste. For one thing, it was dreadfully bitter. To make it more palatable, the Spaniards took to adding sugar.
Upon their return to Europe, the conquistadores introduced the new beverage, which acquired instant popularity. Many variants were tried, flavoured with assorted spices.
After a brief period as a monopoly of Spain, the method of processing cocoa to make chocolatl became common knowledge. During the 17th century, hot chocolate was a popular and stylish drink, fashionable in the highest circles.
For several centuries, chocolate was something one drank. It was not until the 19th century (1847, to be exact) that solid chocolate became available. Milk chocolate was devised in 1876 by a Swiss gentleman named Daniel Peter.
Today, "chocolate" is a diverse and multifaceted product, with many different variants in terms of production, flavouring and marketing. Even so, this ball started rolling when Montezuma decided to treat his distinguished visitors to an extra special treat.