The word Pali simply means ‘text’ but has come to be used as the name for the language that the Tipitaka used by Theravada Buddhists is written in.
Traditional Buddhists believe that the Buddha spoke Pali although modern philologists have determined that Pali was actually a language of western or central India and thus could not have been known to the Buddha. Pali has long been considered a sacred language by some Theravada Buddhists and many of them believe that the Dhamma can only be fully understood by knowing Pali. However, the Buddha knew that no one language is better than any other in transmitting truth and thus his exhortation; ‘I allow you to learn the Buddha’s words each in your own language’ (Vin.II,139).
Although not the language of the Buddha, Pali does represent the language of the earliest, oldest teachings of the Buddha and the Pali Canon (Tipitaka) is dated earlier than any Sanskrit or Mahayana text.
A Handbook of Pali Literature, Oskar von Hinuber, 1996.