According to British philologist and Professor Emeritus of Indian Studies at Cambridge University, Kenneth Roy Norman, Pali was mistakenly made to be the name of the language of the Canon. He explains how, below. He also links it to the Canon.
From "The Pāḷi Language and the Theravādin Tradition" (1983) by Kenneth Roy Norman:
The dialect of Middle Indo-Aryan which is found in the texts of the
Theravadin Buddhists and usually called "Pali" by European scholars
is nowhere so called in the Theravadin canon. The word pāli is found
in the chronicles and the commentaries upon the canon, but there it
has the meaning "canon" and is used in the sense of a canonical text
or phrase as opposed to the commentary (aṭṭhakathā) upon it. This
usage is made clear by the fact that the word pāli sometimes
alternates with tanti.
It would seem that the name "Pali" is based upon a misunderstanding of
the compound pāli-bhāsā "language of the canon", where the word
pāli was taken to stand for the name of a particular bhāsā,
as a result of which the word was applied to the language of both canon and
commentaries. There is evidence that this misunderstanding occurred
several centuries ago.
According to Bhikkhu Bodhi (from here - taken from "In the Buddha's Words" (2005), Wisdom Publications, page 10):
Scholars regard this language (Pali) as a hybrid showing features of
several Prakrit dialects used around the third century BCE, subjected
to a partial process of Sanskritization. While the language is not
identical to what Buddha himself would have spoken, it belongs to the
same broad language family as those he might have used and originates
from the same conceptual matrix. This language thus reflects the
thought-world that the Buddha inherited from the wider Indian culture
into which he was born, so that its words capture the subtle nuances
of that thought-world.