The Spanish word 'mercadillo' (meaning 'small market' or 'street market') comes from the Spanish word 'mercado' ('market') combined with the diminutive suffix '-illo'. The word 'mercado' itself can be traced back through Latin, where it derives from 'mercatus' (meaning 'market'), which came from the verb 'mercari' ('to trade'). At the root of this word family is the Latin noun 'merx', meaning 'merchandise'.

The diminutive suffix '-illo' gives the word a sense of being smaller or more informal than a regular market, which is why 'mercadillo' typically refers to smaller street markets or flea markets rather than large commercial marketplaces.

The most common related Spanish word is 'mercado', meaning 'market', which is the base word from which 'mercadillo' is formed. Other related words include 'mercancía' (merchandise), 'mercader' (merchant), and 'comercio' (commerce). All these words share the same Latin root relating to trade and commerce.

Several English words share the same Latin ancestry as 'mercadillo', including 'merchant', 'merchandise', 'mercantile', 'commerce', and 'market'. All these words can be traced back to the Latin 'merx' and 'mercari'. The connection is particularly clear in 'market', which developed from the same Latin word 'mercatus' that gave Spanish 'mercado'.