It derives from the Lovecraft Mythos of the "Great Old Ones", demigods from some other dimension who used to rule the cosmos, but were cast out or put to sleep, yet may awaken at any time and turn everything totally to shit, to put it metaphorically.

Among those Great Old Ones the scariest seems to have been dread Cthulhu!!!! Cthulhu is totally nasty, merciless, and horrible beyond description. Anything proceeding forth from Cthulhu can be termed the "spawn of Cthulhu". Such spawn generally smell very bad, make hideous noises, and can be counted on to have an unsettling effect on all that they encounter as they lurch about in an inchoate and positively eldritch fashion, spreading havoc, terror, and random inconvenience of an extreme sort.

The word "spawn" then became vulgarized and shortened to "spaw" in the common vernacular.

And there you have it. ;-D