Seiza is written with two Chinese characters. The character pronounced sei- means "proper, right, true," and by itself can be pronounced tadashii, meaning "just right" or "proper." The character -za means "sitting posture," and is written with an ideograph depicting people sitting on a raised platform under a roof. To the Japanese, sitting in seiza, with one's shins folded under, is the most efficient, beautiful, and "proper" posture while engaged in a formal activity sitting on tatami mats indoors.
Quote taken from: ''What is Seiza?'' by Wayne Muromoto
Humorous definition: Seiza is a way of sitting that will guarantee that your legs go to sleep within 15 minutes and you will fall over when you try to stand up.
(bugcat: Wiktionary's article on the character 座 disputes the explanation given by Muromoto. It says that 座 is a phonosemantic (sound-meaning) compound, composed of the semantic 广 ("house on cliff") and the phonetic 坐, which it gives the Old Chinese pronunciation *zoːlʔ, *zoːls. It further describes 坐 as an ideogrammatic compound of 土 (ground) with 留 (to stay).)