Chilly is cold enough to be unpleasant but nowhere near dangerous. A chilly morning where you regret leaving the coat at home, a chilly kitchen with a stone floor, a chilly wait at the bus stop.
It works about people as well as places: a chilly reception, a chilly silence at the table, a chilly reply to a friendly question — cold in manner, not in temperature. Note where the coldness sits. 'The room is chilly' is about the room; 'I'm a bit chilly' is about you. The family around it is chill (both a noun and a verb), chilled, and chilling — and chilling has moved on to mean frightening, so a chilling story is not a cold one. Chilly and chilli are different words: one is weather, one is a pepper.
1adjectivechillyUnpleasantly cold.
“It was a chilly evening, so we ate indoors.”
synonyms: cool, nippy
2adjectivefeelingFeeling cold yourself.
“I'm a bit chilly — could you shut the window?”
3adjectivefrostyUnfriendly and distant in manner.
“His suggestion got a chilly response from the committee.”
Too few real examples of this word to estimate which sense is commonest.
Also accepted in games: cool
Chilly is simply chill with -y stuck on the end, the way rain becomes rainy. Swedish kylig and Norwegian kjølig are its cousins, and they mean exactly this: cold enough to notice.
Proto-Indo-European
*gel- — to be cold
Proto-Germanic
*kaliz
Proto-West Germanic
*kali
Old English
ċiele
Middle English
chele
English
chill
English, today
chilly
Built from
From chill + -y. Cognate with Swedish kylig (“chilly”), Norwegian kjølig (“chilly”). chill comes from Middle English chele, chile, from Old English ċiele, ċele (“cold; coldness”), from Proto-West Germanic kali, from Proto-Germanic kaliz, from Proto-Indo-European gel- (“to be cold”). Closely related with Dutch kil. Also akin to cool, cold, gel, and congeal, which see.
Etymology from Wiktionary, CC BY-SA