"cyber" comes from the greek word for the helmsman of a ship - it means to steer. As in "cybernetics" it's all about signals. Cyberspace is the space created by connecting devices together and sending signals to each other.

"cipher" or "cypher" comes from an arabic word for zero or to calculate, especially to encode. So cypherspace is the space created by algorithms (another Arabic word). cypherspace is more abstract than cyberspace. cyberspace is more directly died to the wary giants of flesh and steel which dominate the physical world, as the signals travel down wires, although packet switching allows them to route around damage. Cypherspace decouples from the physical world by another layer. Via content addressing (hashes) we directly refer to data in a way that allows us to route-around-damage a step more than mere packet-switching. In packet-switching, the end points must still be secure, but with content addressing the end points just had to be secure at the time they published.

Cypherspace is another world, a higher level of abstraction accessed through cyberspace, infinitely more vast.