From someone in the 70s who wrote an Alice in Wonderland parody manga that used the word "Lolita" to refer to Lewis Carroll's obsession with Alice after the term "Lolita complex", which comes the book of the same name by Russel Trainer written during the same time. Yet, the translation of the book into Japanese was done in a way that lost the sexual connotations and instead tied it to the romanticized girls' culture (shōjo bunka) in Japan, thus didn't receive the same stigmatized connotations. From there, other authors and the otaku community just kinda started using the word to refer to fan-favorite cute, female characters from popular shoujo manga.

Few decades later, in the 90's, it just began being used to refer to a fashion trend which was similar to the way Alice would be presented. FYI, Japanese culture during the 70's and 80's was weirdly obsessed with Alice in Wonderland.

Similar to how "Goth" subculture has nothing to do with 3rd century Germanic peoples nor 12th century medieval architectural style.

Edit: love how people are down voting factual history just because it contradicts their biases. Typical.