जनपदशब्दात् क्षत्रियादञ्

The affix अञ् comes in the sense of descendant after a word which while denoting a country, expresses also a tribe of क्षत्रिय-s.
Thus पाञ्चालः 'the son of Panchala', so also ऐक्ष्वाकः and वैदेहः are Kshatriyas who live in that country. Of course, when the word is only expressive of Kshatriya, but not of the name of a country, अञ् will not be used but अण्, the difference being in the accent. Thus द्रौह्यवः 'the son of 'Druhya'; पौरवः 'the son of Puru.' Why do we say when it expresses Kshatriyas? Observe ब्राह्मणस्य पञ्चालस्यापत्यं = पाञ्चालिः, 4.1.95 'the son of Panchala a Brahmana'; so also वैदेहिः ॥

Vart:- Let the same affix, which comes when the sense is that of the progeny, be added to a word denoting a country named after Kshatriyas, to denote the king thereof. Thus पंचालानाम् राजा = पाञ्चालः 'the king of the Kshatriyas called Panchala or of the country of Panchalas'. So also वैदेहः, 'the king of the Kshatriyas or of the country of Videha'.

The words Panchala &c. originally are names of Kshatriya tribes only, secondarily they have been applied to the country inhabited by those tribes, because the Taddhita affix denoting 'the country inhabited by them', is elided by 4.2.81. Thus the same word पञ्चाल comes to denote the Kshatriya tribe as well as the country called Panchala. It will make practically little difference to consider words like Panchala &c. as original (not derivative) name of countries as well as of Kshatriyas. In fact, Panini himself considers them in the same light in this sutra, and does not think them to be derivative words, in spite of his own sutra 4.2.81. Those words when denoting a country are always in the plural, as पञ्चालाः, in denoting the Kshatriya, they are in the singular.