FUN as a noun means ‘a state of enjoyment, amusement or pleasure with no serious purpose’. The homophone, also spelt fun is a verb, meaning ‘to deceive or befool’. Despite being basic vocabulary, this word does not appear in English until the late 1600’s- late Middle English. . Commonly used phrases using fun are ‘–in fun’, ‘–for fun’ and ‘make fun of-‘. Fun is established in informal use and the comparative and superlative forms funner and funnest may be used rather than more or most fun in extremely informal contexts.
Fun as a noun has an uncertain origin. It is probably imported from Ireland and of a Celtic origin. The Celtic Irish word fonn means delight, pleasure, desire, longing, a tune or song. In Gaelic, fonn means pleasure, longing, temper of frame of mind’.  Before this point, the origin of fun is uncertain.
Fun as a verb (funned, funning) is usually found in informal American English. Common phrases with this meaning of fun include ‘make fun of-‘ and ‘-just funning’. This word originates from the Middle English fond, usually found as a verb- fonnen, meant ‘foolish, remarkably silly or infatuated’ or ‘to act foolishly’. (thou fonnist means ‘you are foolish’). This meaning continued to be employed in England’s North Country until the mid 1800’s. 
The base of fonnen, fon, can be found in other northern European Languages including Swedish: fâne, ‘a fool’ and Icelandic where fáni ‘a standard or war flag’ also means ‘ metaphorically, a buoyant, high-minded person’. In Gothic, fana ‘a bit of cloth’ is cognate with High German fahne ‘a standard or flag’ the Latin ‘pannus’ also means ‘a bit of cloth’. In light of this series of cognates, it can be concluded that Middle English fond=flag-like.
This metaphor of a flag to describe fun apparently relates to both the noun and the verb: a flag is high-flying and uplifting. However, fond was commonly used in the North of England and fun only appears in their dictionaries as ‘to befool’. Fun meaning ‘enjoyment’ arose in the Southern areas and is not apparently related to fond. It seems that flags are being interpreted as whimsical, then foolish and finally interpreted as a verb ‘to make another seem foolish’.
Fun is most often used in reference to children’s activities. Fun as in teasing is usually discouraged among children, as it is thought to breed malice in later life. Though fun is a highly subjective quality, fun activities are typically high-energy and involve much movement though this is sometimes simulated rather than physical. Modern examples of fun include the ‘fun park’-huge areas filled with rides- and the ‘fun house’, which can be seen as exciting or befooling. Fun is still in one sense, a temper or frame of mind as some people are characterized as such. The ability of fun to distort one’s sense of time is captured in the expression ‘time flies when you’re having fun’.
Brockett, John Trotter. "Fun, Fond." In A Glossary of North Country Words in Use, edited by Emerson Charnley, 126. 2nd ed. Vol. 1. London, England: Baldwin and Craddock, 1825.
"Fond, Fun." In Oxford Dictionary Online.
Skeat, Walter. "Fun, Fond." In An Etymological Dictionary of the English Language, 217-23. London,
England: Claredon Press, 1888.