Hi, M-
I have always thought that the lyrics were nonsense words, but maybe I'm wrong. The Cooperative Recreation Service songbooks say this is a "spinning song," but give no further explanation or nation of origin. I see above that somebody thinks it's Swedish, but I'd like to see documented evidence of that.
I have a school songbook titled Music Across Our Country, published by Follett in 1956. The song is on page 56, and is described as a "Dutch spinning song." The notes say, "Sarasponda may mean, 'Sara spun it'" - but that's only the guess of the editors, I think.
There's an inconclusive thread on this song at Snopes.com that partly refutes the Dutch attribution. Wikipedia says the composer is Andrew James Petsche, but there's no documentation of that. I'd say it's a popular Girl Scout song of unknown origin and meaning. All the information I've seen about its meaning and origin, is unconvincing. The earliest printed version of the song that I've found was in a pocket songbook titled Sing It Again, published in 1944 by the Cooperative Recreation Service. That predates its appearance in any of the Scout songbooks we've indexed.

-Joe-