Silly can be traced back to the Anglo-Saxon saelig which meant blessed or happy. It is connected to the German selig denoting blessed or holy.
Because innocently happy, holy people were sometimes perceived as less intelligent, the word slid into its modern sense of foolish. The semantic shift is:
blessed → innocent → harmless →deserving pity →feeble-minded →foolish.
This is a frequent movement and can seen in simple or naif. Notice also how English uses the feminine (naive) of that French word, even for a man.
The form of the word altered, being sely in Middle English. Another adjective sellic meaning strange may have influenced the downward trend but it is a perfect example of pejoration of meaning.
Do you fancy a CUPPA before reading the next post on amelioration of meaning? I'll join you.