Gaily means cheerfully and brightly. Coloured, or done with a light heart.
It attaches to decoration, so a gaily painted boat or gaily coloured bunting, and to manner, so somebody chatting gaily is entirely unaware of the trouble ahead. That obliviousness is often the point, since gaily is frequently used just before something goes wrong. The word is dated, because gay has moved so far that the adverb now sounds like a period piece.
1adverbgailyIn a bright and cheerful way.
“The stalls were gaily decorated for the fair.”
Middle English
gay
English
gay
English, today
gaily
Built from
From gay + -ly. gay comes from Middle English gay. From Middle English gay, from Old French gai (“joyful, laughing, merry”), usually thought to be a borrowing of Old Occitan gai (“impetuous, lively”), from Gothic 𐌲𐌰𐌷𐌴𐌹𐍃 (“impetuous”), merging with earlier Old French jai "merry"; see jay, from Frankish gāhi; both from Proto-Germanic ganhuz, ganhwaz (“sudden”). This is possibly derived from Proto-Indo-European ǵʰengʰ- (“to stride, step”), from ǵʰeh₁- (“to leave”),Marlies Philippa et al., eds., Etymologisch Woordenboek van het Nederlands, A-
Etymology from Wiktionary, CC BY-SA