Philips came out with a bunch of different colored books, where each colored book contained the specification for a certain type of cd format. The red book was the book with the specification for the audio cd format (both physical disc characteristics and audio encoding), the yellow one was for data cd-roms, orange book was for cdr/cdrw, white book was for video cds, etc.
I think a lot of people just refer to "red book" cds whenever they are talking about regular 16-bit PCM encoded discs, even though technically they might be "orange book" (burned cdrs), or "blue book" (the cds with music and data on the same disc). Mostly, I think people started using the term more frequently to differentiate regular cds from other newer formats, like sacd and dvd-a.