The archive bit was (is) used for backup purposes. The backup program would scan thru files and backup those with the archive bit set. After backing up, it resets this bit, indicating that the file was backed up. Whnever a file is modified, its archive bit is set so as to inform the backup app that the file has been modified and that it needs to be backed up.
Apart from this an archive genberally means a collection. With time it has come to mean (partially, though purists would disagree) a file comprising a collection of files either compressed (like zip or rar) or uncomressed (like tar).