Transferred use of the surname, originally a local name for someone who lived in a dale or valley. It is now fairly commonly used as a given name, along with other monosyllabic surnames of topographical origin (see for example Dell and Hale).
German and Jewish (Ashkenazic): from Middle High German pfā, pfāwe ‘peacock’, modern German Pfau. Compare English Peacock. As a German name this is generally a nickname for a vain strutting person, or in some cases a habitational name for someone living at a house distinguished by the sign of a peacock. As a Jewish name, it is generally ornamental.