Maybe the better question is -- how is it, given that meaning is public, that we understand novel uses? — Moliere
Well, sometimes we don't understand.
"Dope", for instance. The word was derived from Dutch "doopen" meaning 'to dip" or 'sauce' and was imported into English about 200 years ago. It has been used to mean a) a drug b) inside information c) a stupid person d) a thick varnish or a lubricant. It also has a meaning in semiconductor manufacture, It is both a noun and verb.
Those uses were familiar to me. "Dope" meaning 'cool' or 'high quality' -- dope shoes -- was meaningless to me the first few times I encountered this usage.
Things used to be "hot"; then they became "cool".
I read pretty widely, and I thought I had a large vocabulary. However, I keep coming across English words that are as unfamiliar as Sanskrit. I've been collecting them, along with their meaning. The words are not common at all -- I check them out on Google Ngram, which is a measure of the frequency that words have appeared in print during the last several hundred years.
Who the hell uses these weird words?
A medievalist would be familiar with
destrier, a medieval knight's warhorse. But who uses
instauration, the action of restoring or renewing something? Here's one with very narrow usage:
floccinaucinihilipilification The Latin elements were listed in a well-known rule of the Latin Grammar used at Eton College, an English public school. Right. Not my neighborhood. But here is a rare word that one could use at TPF fairly often:
monocausotaxophilia, "the love of single ideas that explain everything, one of humanity’s most common cognitive errors." The novelist Kim Stanley Robinson may have coined this word in a Financial Times article. The article is behind a paywall.
Paywall is a new word we all know the meaning of.
So: we encounter new words that are familiar to other speakers; we can guess at the meaning from context, ask what it means, or look it up. If we hear the word several times, we might add it to our own lexicon. Or not: I read somewhere that after middle age, people tend not to learn new words. My guess is that this is not a brain phenomenon, but a cultural one. Life no longer brings older people into contact with people regularly using new and different vocabularies. Plus, other middle aged or older people find somebody using too many new words very annoying.
I have added this new word to my vocabulary: deliquesce. It means to melt, or fade away, It's what happens to a snowman on a warm winter day. There are times when I wished I could just deliquesce -- quickly melt and fade away from the unpleasant situation I was in. 'Deliquesce' also labels the unpleasant experience of becoming obsolete and irrelevant--another experience I've had (sob, snivel).