My wife mentioned that with the weather warming up our local flea market would be reopening soon. This got my word-mind working on why you would want to name a shopping place after those pesky little parasites of the order Siphonaptera ("wingless bloodsucker") that infest dogs, clothing, and especially upholstery on old furniture that might be for sale. It seems like very poor marketing. My wife said she doubted that the etymology was that literal.
A flea market is usually a street market that provides space for vendors to sell previously-owned (second-hand) merchandise. Being outdoors, they are often seasonal. The line sometimes blurs as these places move indoors or become year-round places. Sometimes "swap meet" or "casual market" is the label. I've seen flea markets mixed with farmer's markets where (hopefully) at least the produce is not second-hand!
And what happens when a group of street vendors begins to gather in one place? Is that a flea market? Probably not, and especially not if they are selling new items as many street vendor do with t-shirts, art etc.
I still view a flea market as a place selling used goods, from collectibles (books, records, toys etc.), to antiques (from jewelry to furniture) and vintage clothing.
There is now a National Flea Market Association which almost seems antithetical to the whole casual concept.
Where did the "flea" part of the term come from? Certainly markets of a similar nature existed in the Middle East and Asia a very long time ago. But the fleas appellation?
One American theory is that there was a "Fly Market" in the late 1700s in New York City, located at Maiden Lane near the East River in Manhattan. The location was originally a salt marsh and so flies, fleas and other annoying critters were part of it. That Fly Market was the city's principal market by the early 1800s. But no mention of fleas in the name.
Perhaps, the American term made its way over to Europe, but more likely is that the "flea" term came from France to America. This loan translation is known as a calque. For example, the French “cela va sans dire” is loaned to English as “it goes without saying.” [Sidebar: "It goes without saying" is an odd phrase since we almost always follow it by saying what doesn't need to be said: "It goes without saying that she has plenty of money."]
The accepted etymology for "flea market" is an English calque from the French "marché aux puces" ("market of the fleas"). The first reference to this term appeared in stories about a location in Paris in the 1860s which was actually called the "marché aux puces" because items sold there were previously used and worn and so could very easily have contained fleas.