If many of the stones were erect and in situ when the Saxons came to Avebury, they may well have seen it as a walled ditch and called it Weall-dich. Or they may have seen it as a ridged ditch (what is a ridged ditch?) and called it Wale-dich. Then again as has been mentioned - it could be the ditch of the Waelas - those foreign Brits who later became Welshmen. Yet again you could have Wael-dich - a ditch of slaughter as in waelstow - a place of slaughter. And when did Wale-dich become Avebury? Isn't Avebury a Saxon place name too? Old English for a fortified place (often Roman) is burh so perhaps they later saw it as a fort linked to a personal name such as Affa.

The meanings of words change constantly and to get close to an understanding of the meaning of place names requires sight of the earliest known recorded name. I would be interested to see what the Wiltshire tome of the English Place-Name Society has to say on this before jumping to any conclusions.