It would appear that the word 'lych' is an Old English/Saxon word for corpse, meaning it was the gate the dead were carried through for burial.
Thanks to Wikipedia for the following information:
Lychgates consist of a roofed porch-like structure over a gate, often built of wood. They usually consist of four or six upright wooden posts in a rectangular shape. On top of this are a number of beams to hold a pitched roof covered in thatch or wooden or clay tiles. They can have decorative carvings and in later times were erected as memorials. They sometimes have recessed seats on either side of the gate itself, for the use of pall-bearers or vigil watchers.
The most common form of lychgate is a simple shed composed of a roof with two gabled ends, covered with tiles or thatch. At Berrynarbor, Devon, there is a lychgate in the form of a cross, while at Troutbeck, Westmorland, there are three lychgates to one churchyard. Some elaborate gates have chambers over them. In Texas and the South of the US, lychgates are simpler in construction, usually consisting of a steel or wooden span with a sign showing the name of the burial space.Bride & Groom (250), confetti (15), lychgate, st nicolas church (8). 1/500; f/7.1; ISO 200; 24.0 mm.