tab (n.1)

c. 1300, "small, portable slab of durable material, often covered in wax in which writing was incised; flat surface for an inscription" (originally especially the two Mosaic tables of stone), from Old French tablete "small table, merchant's display counter" (13c., Modern French tablette), diminutive of table "slab," or from Medieval Latin tabuleta (source also of Spanish tableta, Italian tavoletta), diminutive of Latin tabula (see table (n.)).

 From late 14c. as "flat surface for painting or engraving." The meaning "small, flattish cake of some solid medicinal substance" is by early 15c. The meaning "pad of writing or blotting paper" is by 1880. The classical Latin diminutive was tabella "little board, tablet; ballot, legal paper," and this sometimes was used in English in the pharmacological sense (1690s).

1884, Tabloid, "small tablet of medicine," trademark name (by Burroughs, Wellcome and Co.) for compressed or concentrated chemicals and drugs, a hybrid formed from tablet + Greek-derived suffix -oid.

A new and successful remedy has been found for the distressing nervous complaint known as hay fever. One-sixth of a grain of the recently discovered remarkable anæsthetic cocaine is incorporated into what are called tabloids and inserted in the nasal passages. [South Branch (W. Va.) Intelligencer, Oct, 30, 1885]

 By 1898, it was being used figuratively to mean a compressed form or dose of anything, hence tabloid journalism (1900), simplified and, in the negative view, sensationalized, and tabloid (n.) in reference to newspapers that typified it (1901).

The concept and word were associated originally with British publishing magnate Alfred C. Harmsworth (1865-1922), editor and proprietor of the London Daily Mail. Harmsworth's use was in reference to the short, condensed news articles; by others it might be felt as referring to the newspaper itself being smaller than a broadsheet.

"What a person wants in his daily morning paper not long-winded essays, nor does he care to have undigested news by the column. He prefers it in concentrated tabloids, with all the interesting points put prominently forward, so that he can run and read." [quoted in Victoria (Australia) Age, Jan. 29, 1898]