Dachs is the the German name for a badger (because of its short legs, a Dachshund is able to follow a badger into its burrow). The adjective frech can mean anything from "rude" or "impudent" to "sassy" or "cheeky." The latter, almost positive, meaning is implied in Frechdachs, which Germans use in contexts where one would use "whipper-snapper" or "little rascal" in English, i.e. to refer to a somewhat sassy child. And I have no idea how badgers got involved in all of this.
Addendum (5/23/2012): As was doing research for my book, Wild Things in the German Language, I came across some explanations. According to one of them, Frechdachs is a mnemonic to help students of Latin remember that audax means frech in that language. I find this explanation somewhat more plausible than a second one, which claims that frech survives in Frechdachs in the now obsolete meaning of "brave" and that badgers got a reputation for bravery because they were willing to defend their burrow, when they had young, even against larger predators.
[Source: Wild Things in the German Language: Kindle version | iBook version]
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