The name comes from Japanese Gashapon machines. Gashapon is an onomatopoeic word, as Gacha is the sound that is made when turning the handle to dispense the toy, and Pon is the sound of the prize falling out. The term Gacha is derived from that first syllable.
It is considered a freemium way to allow players to experience games for free with the option to earn or pay for items. Yes I know sometimes it can tip the balance of game play into pay to win, and the argument that players should be able to pay a full price to experience the game completely unlocked.
I believe the Gacha model for Mobile gaming is great because it increases competition. We as Mobile gamers get a rich ecosystem of games to play and try without spending a dime.
It also encourages developers to balance and update games as they get more popular, updates in Android gaming far outpace every other platform updates. Updates and competition are good for a game economy for everyone. I think it is up to us as players to decide which games we really want to support before we blindly and impulsively hit that purchase button.