From Stamps of the World
Dolgellau (Hist; Dolgelly and Dogelley see below for further archaic spellings.) is a market town in Gwynedd, north-west Wales, lying on the River Wnion, a tributary of the River Mawddach. It is traditionally the county town of the historic county of Merionethshire (Welsh: Meirionnydd, Sir Feirionnydd), which lost its administrative status when Gwynedd was created in 1974. Dolgellau is the main base for climbers of Cader Idris.
The name of the town is of uncertain origin, although dôl is Welsh for "meadow" or "dale", and (y) gelli (soft mutation of celli) means "grove" or "spinney", and is common locally in names for farms in sheltered nooks. This would seem to be the most likely derivation, giving the translation "Grove Meadow". It has also been suggested that the name could derive from the word cell, meaning "cell", translating therefore as "Meadow of [monks'] cells", but this seems less likely considering the history of the name.
The earliest recorded spelling (from 1253, in the Survey of Merioneth) is "Dolkelew", although a spelling "Dolgethley" dates from 1285 (the thl is an attempt to represent Welsh /ɬ/). From then until the 19th century, most spellings were along the lines of "Dolgelley", "Dolgelly" or "Dolgelli" (Owain Glyndŵr's scribe wrote "Dolguelli"). Thomas Pennant used the form "Dolgelleu" in his Tours of Wales, and this was the form used in the Church Registers in 1723, although it never had much currency. In 1825 the Registers had "Dolgellau", which form Robert Vaughan of Hengwrt adopted in 1836. While this form may derive from a false etymology, it became standard in Welsh and is now the standard form in both Welsh and English. It was adopted as the official name by the local rural district council in 1958.
Shortly before the closure of the town's railway station it displayed signs reading variously Dolgelly, Dolgelley and Dolgellau.