Its source is ceorl, an Ancient Germanic name meaning "Freeholder."
Of all the feminine forms of Carl (and its equivalent Charles), the oldest is probably Carolina, which developed in Latin as a feminine form of Carolinus, itself an elaboration of Carolus.
Carolus Magnus was the Latin name of the first Holy Roman Emperor, a Germanic leader known in the English-speaking world as Charlemagne (French for ''Charles the Great''). He was crowned emperor in 800 A.D., after uniting much of central Europe and building a relatively stable society out of the chaos that followed the fall of Rome.
Charlemagne's widespread fame gave rise to many forms of his name in many languages. Each male form suggested a female equivalent, which in turn changed and developed, so that we see Carolina changed to Caroline, shortened to Carol, and so on.