There's one thing a writer of fiction learns early — don't knock a reader out of your story because of words that mean what you want, but that the character would never have used.
If you're writing a work of contemporary fiction, that usually means matching your dialogue to your characters. The impoverished nine-year-old is not likely to use gold-plated words, except perhaps as a comic gesture.
For non-contemporary fiction, the bigger problem is anachronism. When you remember that “khaki” comes out of British imperial rule in India, you are well-advised to avoid it as a descriptive term in a book on the Crusades, or in a fantasy world where neither Britain nor India have ever existed.
When I read books, I find the worst offenders are phrases based on technology that the author forgot is modern, or at least, too modern for the context. “He's never learned to put on the brakes”, “He's just blowing off steam”, “He's a real live wire, isn't he?” — these are a slap in the reader's face in the wrong context.
Right now I'm just finishing up The Chained Adept, a created world fantasy. “Created world” means it's not based on Earth, even in some mystical version, but on an entirely different world with its own rules and its own past. Tolkien's Middle Earth is such a place.
There are conventions about such places. For example, you often leave the background ecosystem in place (grass, horses, seasons) even if you introduce new elements (dragons, giant trees). That makes it easier for readers to orient themselves and focus on the actual story. (This is different from a created alien world in science fiction, where it would be wrong to supply Earth-normal elements like that, because that would grossly violate our understanding of contingent evolution.)
Still, you don't want the created world, where things like magic may be real, to be (as Ursula LeGuin would say) just like Poughkeepsie. You want it to live in its own bubble of existence, with its own languages and cultures, and its own past.
For that to work, you have to scrutinize the words you use carefully, and with a sense of the history behind every word.
Is “sabotage” the word you want? Are they throwing wooden shoes into industrial machinery in protest? Probably not.
How about oaths like “bloody hell”? When “bloody” derives from “by our Lady” (as in Mary, Mother of God), it begs the question of who the Lady is. “Hell and damnation!” might not apply in a world without Christianity.
Sometimes just the right word slips out. Only it's the wrong word. Should something in your pre-gunpowder world “explode”? If the world has no lions, is anyone “leonine”?
The degree to which words resonate with the full voice of their history and derivation varies from reader to reader, and writer to writer. But you are better off being sure of where your words have been before you use them.
