The story
From yard + horse. The name is figurative, calling a tractor a horse (compare iron horse for locomotive); the name as a solid compound seems not to be attested in an earlier sense referring to a draft horse working in a yard such as a barnyard, lumberyard, or coalyard, although as an open compound or sum of parts, yard horse would be unsurprising there.
Etymology from Wiktionary, CC BY-SA 4.0.