1) American cultural convention 2) Body lice 3) Playground bugs 1) Lice 
Cooties is a fictional childhood disease used in the United States of America, Canada, Laois (Ireland) and Australia as a rejection term and an infection tag game (such as Humans vs. Zombies). It is similar to the British dreaded lurgi, and to terms used in the Nordic countries, in Italy, and in New Zealand. A child is said to `catch` cooties th.....
from kutu, 'lice'