one of any of several breeds of hunting dogs that originally had the habit of crouching when game was scented but that are now trained to stand stiffly and point the muzzle toward the scented game.
C16: so called because they can be used to indicate where game is: see set1
Word Origin and History for setters
setter
n.
"one who sets (something)," c.1400, agent noun from set (v.). As a type of hunting-dog (originally a type of spaniel), 1570s, so called because the dog is "set" on game.