Old English fæðm "length of the outstretched arm" (a measure of about six feet), also "arms, grasp," and, figuratively "power," from Proto-Germanic *fathmaz "embrace" (cf. Old Norse faðmr "embrace, bosom," Old Saxon fathmos "the outstretched arms," Dutch vadem "a measure of six feet"), from PIE *pot(e)-mo-, from root *pete- "to spread, stretch out" (see pace (n.)). There are apparent cognates in Old Frisian fethem, German faden "thread," which OED explains by reference to "spreading out."
Old English fæðmian "to embrace, surround, envelop;" see fathom (n.). The meaning "take soundings" is from c.1600; its figurative sense of "get to the bottom of, understand" is 1620s. Related: Fathomed; fathoming.