Probably the best and, according to the Dictionary of Americanisms, the first printed description of the word “hillbilly” appeared in the New York Journal, April 23, 1900:
“A Hill-Billie is a free and untrammelled white citizen of Alabama, who lives in the hills, has no means to speak of, dresses as he can, talks as he pleases, drinks whiskey when he gets it, and fires off his revolver as the fancy takes him.”
In more recent years the territory has been vastly increased and the habits enlarged to include addiction to stringed musical instruments, often as accompaniments to group or individual nasal singing of so-called “hillbilly songs.”
Billy, tracing back through some four centuries of usage, just means “fellow.”
On the History Channel’s show “Secrets of American Slang,” they said the term harkens back to Scotland and Hill people. The ones who supported King William became known as Hillbillys. Many of these Hill people emigrated to the Appalachians and came to be known in America as Hillbillys also.