We use so many acronyms in modern day English: especially on the internet, where terms like LOL (laughing out loud), AFK (away from keyboard) and BRB (be right back) are so commonplace that they are almost universal. Some are a little rarer and less-known, such as FWIW (for what it's worth) YMMV (your mileage may vary) and TIL (today I learned), but spend enough time on internet messageboards and discussion threads and you'll end up learning a great deal of them.
Acronyms are something of a 20th century invention, and were extremely rare before that. Some acronyms have become so part of our vocabulary that they are no longer treated as such, instead as words in their own right. For example, the well-known words radar and scuba are very rarely capitalized, belying the fact that they were originally abbreviations (RAdio Detection And Ranging, and Self-Contained Underwater Breathing Apparatus, respectively).
A more recent variant of the noble acronym is the backronym - unsurprisingly a compound of the words back and acronym - and is used to describe when the opposite process of forming an acronym occurs, i.e. a word is broken up and each of its letters is assigned a word.
Sometimes this is done for humor (e.g. Ford, the automobile company, "Found On Road Dead"), sometimes to aid the learning process (e.g. in music, the notes on a stave found in the spaces between the lines, ascending from the lowest, F, A, C and E - Face). However, sometimes backronyms become so embedded in culture that they give rise to false etymologies - that is to say, a fake story of how a word came into being.
A popular folk etymology spawned by a backronym is "posh", a word referring to rich people. The story, popularized by musical Chitty Chitty Bang Bang, goes that on long-distance boat journeys across the Atlantic, the richer passengers would travel on the port side outwards, and the starboard side homewards, in order to avoid the glare of the sun in their cabin (Port Outwards, Starboard Homewards - POSH). This has since been debunked as a myth, though people continue to believe it (the actual source of the word is unknown).
Another example of this kind of backronym is the sport of golf - some thought that the word originates from the saying "Gentlemen Only, Ladies Forbidden" (it is actually derived from the Scottish word for the sport, gowf).
Here are some more examples of false etymological backronyms from the Wikipedia page on the subject:
Other examples include the brand name Adidas, named for company founder Adolf "Adi" Dassler but falsely believed to be an acronym for "All Day I Dream About Sports"; wiki, said to mean "What I Know Is", but in fact derived from the Hawaiian phrase wiki wiki meaning "fast"; or Yahoo!, incorrectly claimed to mean "Yet Another Hierarchical Officious Oracle," but in fact chosen because Yahoo's founders liked the meaning of the word itself.