The Anglo-Saxons used the phrase Wæs hal! as an everyday greeting. Wæs is a form of the verb "to be" related to modern English "was." Hal is the ancestor of the modern English words "whole" and "hale." Thus, Wæs hal! literally meant "Be healthy!" The Vikings who later settled in Northern England used a dialectal variant of the same phrase: Ves heill! As the Anglo-Saxons and Norse shared a custom of welcoming guests by presenting them with a horn of ale (or cup of mead, or goblet of wine), the greeting evolved into a toast.
The phrase was eventually contracted into one word, Wassail, and came to refer to the act of toasting to someone's health, wassailing, and to a type of alcoholic beverage (spiced ale or punch) used to toast people's health on special occasions. The use of wassailing to mean "caroling" (as in "Here we go a-wassailing...") stems from the habit of singing songs whilst drinking from the "wassail-bowl" during Christmas and New Year celebrations.