ORIGIN OF NAME BHUTAN
In believe the name ‘Bhutan’ may have evolved  from the Sanskrit ‘Bhot-ant’ meaning the ‘end of Tibet’, or from ‘Bhu-uttan’ meaning high land. Early British explorers called it Bootan or Bhotan, and they believed the name derived from ‘Bhotsthan’, meaning ‘land of Bhotias’ (Bhotia is Sanskrit for people from Tibet).Whatever the origin the name evolved into the current from of ‘BHUTAN’, and the people are known as ‘BHUTANESE’ (Drukpa).
Although known as Bhutan to outside world, the country has been Druk-Yul, ‘land of thunder dragon’, to its inhabitants since the 13th century. The people call themselves Drukpa, and the state religion is the Drukpa Kagyu lineage of Mahayana Buddhism.
From Lonely Planet (Guide Book).