Replace is a late arrival. English managed without it until the 1590s, relying on restore, renew, and put back. When replace finally appeared, borrowed from French replacer, it filled a gap no one had noticed was there.
The word is structurally transparent: re- ('again, back') plus placer ('to place'). But the root of place runs deep. Old French place came from Medieval Latin placea, from Latin platea — 'a broad street, a courtyard' — from Greek plateia hodos, 'broad street'. The Greek adjective platys meant 'broad' or 'flat'.
This Greek root produced a surprisingly varied family. A plaza is a broad open space. A plateau is a broad flat highland. A platform is a flat surface to stand on. A plate is a flat dish. Most unexpectedly, a platypus is a 'flat-foot' — from platys ('flat') and pous ('foot') — named by scientists who noticed its broad, paddle-like feet.
Replace carries two distinct senses that developed separately. 'Replace the book on the shelf' means to put it back in its place — the original meaning. 'Replace the broken window' means to provide a substitute — a later development where the new item takes the place of the old. Both senses ultimately depend on the concept of place: a position
The word's transparency is its strength. Unlike many Latin-rooted verbs, replace wears its meaning on its surface.