Cephalo's main developer is Pedro Alcocer, a graduate student in linguistics at the University of Maryland.
The name Cephalo comes from the Greek Κέφαλος, "head". An archaic term for the brain is the encephalon. It's still around in words like encephalitis (a swelling of the brain) and encephalography (the recording of brain signals). The brain, of course, is the generator of the signals that Cephalo processes. Also, cephalopoda is the taxonomic class that includes octopuses and squids. SQUIDs are the highly sensitive magnetometers used in MEG systems to pick up the faint magentic fields emitted by the brain.
In short, it's a bad, complicated pun.