This expression is rarely heard these days, and I understand it to mean "generally speaking" -- correction welcomed. How did the phrasing come about? I recall that it had something to do with sailing ships in bygone days, can anyone help me with this?
I'd hardly say the expression is "rarely heard": the exact phrase "by and large" gets over 5 million Google hits, and, personally, I wouldn't have even said that it's "uncommon."
But yes, the etymology is nautical.
"Rarely heard" -- really?
Completely beside the point, but there's an all-female college near where I live, which shall remain unnamed, and the boys at the neighboring college like to say that, by and large, the girls going there are bi and large. (I'm sure this isn't the only place where this 'joke' is made.)
Edited to add that zashibis's post wasn't there when I opened the thread. I wouldn't have repeated the "rarely heard" point otherwise.

You should suspect all nautical etymologies, because of the nefarious activities of CANOE, the Committee to Ascribe a Nautical Origin to Everything.
But this one, like the others listed at that link, is legit. It's not like acronymic etymologies, which should be should be pooh-poohed unless documented. (And documentation won't be forthcoming.)
By the way, did you know that pooh, as in pooh-pooh, originally stood for Push Out Of Hestimation?
I'm sure this isn't the only place where this 'joke' is made
Unless I'm wrong about shilgia's locale and her definition of "near", I can confirm that. It isn't new either.