The original biscotto was a twice-cooked bread made from barely leavened dough. The second cooking was to dry it out, making a sort of tough cracker that could be taken on journeys, especially by sailors. "Sea biscuits" of this sort are still sold, mostly as emergency food.
By the 14th century or so, biscotto had become the name in Italy for any sort of pastry that was small and crisp, whether cooked twice or not. The recent Grande Enciclopedia Illustrata della Gastronomia defines the word as "a sweet of small dimensions . . . made from flour, water, sugar and shortening with . . . eggs and natural flavorings."
In other words, a biscotto is a cookie. In Italy, even the small, elongated cakes we call ladyfingers, are considered biscotti.
The word biscotto entered our language first in its French form, "biscuit." Now you know why in England, both cookies and crackers are called biscuits.