The meaning of the key's abbreviation is not explicitly given in many IBM PC compatible technical reference manuals. However, IBM states that AltGr is an abbreviation for alternate graphic, and Sun keyboards label the key as Alt Graph.
Apparently, AltGr was originally introduced as a means to produce box-drawing characters, also known as pseudographics, in text user interfaces. These characters are, however, much less useful in graphical user interfaces, and rather than alternate graphic the key is today used to produce alternate graphemes.