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from Wiki:
The term Iranian is derived from the Old Iranian ethnical adjective Aryana which is itself a cognate of the Sanskrit word Arya. The name Iran is from Aryānām; lit: "[Land] of the Aryans".
The old Proto-Indo-Iranian term Arya, per Thieme meaning "hospitable", is believed to have been one of the self-referential terms used by the Aryans, at least in the areas populated by Aryans who migrated south from Central Asia.
Another meaning for Aryan is noble. In the late part of the Avesta one of their homelands was referred to as Airyanem Vaejah. The homeland varied in its geographic range, the area around Herat (Pliny's view) and even the entire expanse of the Iranian plateau (Strabo's designation).
The academic usage of the term Iranian is distinct from the state of Iran and its various citizens (who are all Iranian by nationality and thus popularly referred to as Iranians) in the same way that Germanic people is distinct from Germans.
Many citizens of Iran are not necessarily "Iranian people" by virtue of not being speakers of Iranian languages and may not have discernible ties to ancient Iranian tribes. Unlike the various terms connected with the Aryan arya- in Old Indian, the Old Iranian term has solely an ethnic meaning and there can be no doubt about the ethnic value of Old Iran.
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