About
Chibi is an art style used in Animes and Mangas which is about drawing small and cute characters, given that the term ‘Chibi’ (ちび or チビ) means ‘small person’ or ‘small child’ in Japanese slang. However, while it can be used as translation to ‘little’, the correct term for THAT word is chiisana [小さな]. In english speaking anime and manga fandom, it also conflates with ‘super deformed’ style.
Origin
The term went viral with english anime and manga fans because of the character Chibiusa, a pet name for the daughter of Sailor Moon formed from Chibi Usagi “Little Rabbit”. (pictured here):
An even tinier character in the same anime was named Chibi Chibi (approximately 3 years old). (pictured here): 
These characters from Salior Moon sparked the popularity of the term.