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"Aeris" is a really roundabout variation on the English word "Earth", referring to her role as the last of "the ancients", a race that's in touch with the spirit of the planet. In Japanese characters, her name is written "Earisu", and when they brought it back to English, they swapped the "A" and the "E". Also note that in Japanese, the character "su" can stand for a trailing "th" (like "Sumisu", for "Smith"), or for a trailing "s" (like "Kurisu" for "Chris"). So that's how we go from "Earth" to "Earsiu" to "Aeris".

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Because of the s/th ambiguity of "su", some marketing materials turned her name into "Aerith", which she's also called in her cameo in the game "Kingdom Hearts".

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And yes, it is a cool name. :-)