The word pagan was first used (one could even say it was coined) by Christians in the 4th century to refer to people living in the Roman Empire who practiced pre-Christian religions other than Judaism. Being mainly an urban and cosmopolitan religion after Constantine’s promulgation of religious freedom in the Empire in the year 313, Christianity distinguished itself even geographically from religions practiced and preserved in rural areas. The Latin word pāgānus (from which the English pagan derives) means rural, rustic, and thus “unlearned,” or “unskilled.” Paganism, as Owen David explains, was considered “the religion of the peasantry.”
During the Roman empire, being pagan meant belonging to a certain class – one that was predominantly rural, peripheral, and provincial when compared to the Christian population of the empire, mainly concentrated in important urban centers (as the very early letters of Paul make it clear: Thessalonica, Corinth, Rome itself). But it also implied that one would still commonly practice ritual sacrifice, in the ancient Greco-Roman way. Naturally, people did not call themselves pagans when describing their own religion. It was a term used -- most of the time derogatorily, and as part of a process of self-definition -- by Christians.
The word pagus was a Roman administrative term. It designated either the smallest administrative unit in a province, or a rural subdivision of a tribal (maybe even hostile) territory, including villages, farms, and strongholds. The word made its way into the Middle Ages as a geographical unit even in the Carolingian period.
In his Late Antiquity, historian Peter Brown notes how the adoption of the word paganus was mostly a Latin Christian custom. Elsewhere in the Christian world, the words hellene (that is, “Greek,” in a reference to ancient Greco-Roman practices) or gentile (in Greek, ethnikos) remained in use to refer to non-Christians, perhaps without the derogatory overtones found in pagan.