means Covered in, full of, or resembling sand; also a pale yellowish-brown color, especially of hair.

from From Old English "sandig," simply "sand" plus the adjective ending "-ig" (our modern "-y"). The root "sand" runs deep through the Germanic languages — German "Sand," Dutch "zand" — and is possibly a cousin of words further back meaning the same gritty stuff. As a personal name, "Sandy" is a separate thread: a pet form of Alexander (and later Alexandra), worn smooth like a beach pebble through generations of affectionate shortening.