Lao and Laotian mean different things, a distinction born at independence
The Lao are a Tai people who make up 53.2 percent of Laos and mostly follow Theravada Buddhism. Before independence from France in 1953, Lao and Laotian described anyone in the country; since then, Lao names the ethnic group and Laotian covers every citizen, whatever their ancestry.
Their language belongs to the Kra-Dai family, and they are closely tied to the Isan people of north-eastern Thailand, who also speak Lao and are sometimes treated as the same group. The name itself may echo the Ai Lao recorded in Han dynasty sources, whose descendants included Tai tribes that later moved south. The French linguist Michel Ferlus argued in 2009 that Lao comes from an Austroasiatic word for human being, reconstructed as k.raw. Laotian entered English via French.
From roughly the 7th century to the 13th, Tai-speaking tribes moved south, largely out of the Yunnan and Guangxi regions. Pressure from expanding Han Chinese power, Mongol incursions, the collapse of earlier Tai states, and valleys well suited to wet-rice farming all pushed or pulled them south. Settling on the edges of the Indianised Mon and Khmer kingdoms, they absorbed or displaced the earlier Mon-Khmer inhabitants and took on Indian religion, philosophy and language, and as Khmer power faded, Tai states broke free.
Inside Laos, the Lao and other Tai groups with mutually intelligible speech are classed together as Lao Loum, the lowland Lao, living along the Mekong and its valleys. They make up over 68 percent of the population, half of them ethnic Lao, with groups such as the Phuan and Phu Thai included. Some, like the Nyaw, see themselves as distinct and signal it through dress.
Across the border, Lao communities were resettled in parts of Isan under Siamese rule. Distance from central Thailand helped preserve Lao culture there, and although Isan mixes Lao, Khmer, Vietnamese, Cham, Mon and others, it is majority Lao. Fear of Lao cultural and political dominance led Thai authorities to pursue Thaification policies to fold the region into the nation, and its people are now distinguished by the Sanskrit-derived name Isan, meaning north-east.
Source: Lao people