I once had an amicable debate with the late John Fowles about the naming of nature. Behind his postmodern novelist's persona, Fowles was a skilled, fastidious and almost old-fashioned naturalist, who greatly preferred robust English tags to the "dark science" of Latin. He warmed to the walnut orb-weaver (a spider) but not Nuctenea umbratica. But he was flirting with Zen Buddhism at the time, one of whose axioms is that names are "a pane of smoked glass between us and reality". I disagreed. I've always felt that naming a plant or a creature is a fundamental gesture of respect towards its individuality, its distinction from the generalised green blur. It's the universal first step in beginning a relationship: "What's your name?"

Shakespeare seems to share Fowles's ambivalence, at least when he famously writes, "What's in a name? That which we call a rose by any other word would smell as sweet." We know what he means, but it's an untypically sloppy remark from a poet who elsewhere used the evocative power of exact names to such effect (and who lists two distinct species of rose with quite different smells – musk and eglantine, or sweetbriar – among the adornments of Titania's bank of wild thyme). More typical is Hamlet's famous mock raving: "I am but mad north-north-west: when the wind is southerly I know a hawk from a handsaw." Handsaw is a corruption of a type of English folk-name for the heron, eg hernshaw from the Midlands and hernser from Suffolk, which in turn derive from the Old French hironceau. Hamlet was first performed when anti-French feeling was high in Britain, and Shakespeare was conjuring with his audiences' loathing of the old enemy, and with the contrast between the sharpness of the hawk and a rough hand-tool. My favourite Shakespearean play with words is in the elegy in Cymbeline: "Golden boys and girls all must/ As chimney-sweepers come to dust". This passage is opaque to most modern audiences, who don't know that chimney-sweepers was the vernacular name in Shakespeare's home county of Warwickshire for the brush-like seed "clocks" of the golden dandelion. Children still blow the downy, dusty seeds from the clocks to tell the time.

Writers may use common names imaginatively, but they rarely invent them. In that ongoing process we are all poets, and the immense lexicon of popular names for our fellow beings is the product of a communal enterprise that stretches back thousands of years. As well as Hernshaw, the heron has had more than 30 local names in Britain, including hegrie (Shetland), moll hern (Midlands), frank (from the bird's call – Suffolk), longie crane (Pembroke). Dandelion has at least 50, including clocks and watches, conquer more, devil's milk plant (from its white latex), four o'clock, golden suns, lion's teeth, piss-a-bed (the leaves are a renowned diuretic), priest's crown, wet-weed, wishes.

Common names are a kind of time capsule, a record of the powers of observation and literary inventiveness of ordinary people. They log resemblances, uses, sounds, mythic associations, smells, seasonal appearances, kids' games, superstitions, habitats. They're witty, concise, evocative, sometimes even satirical. The great champion and hedge-theorist of vernacular names was the 19th-century "peasant" poet John Clare. He had a spat with his publisher when he queried Clare's use of a dialect name (woodseers) for the froghopper, which produces the foam known as cuckoo-spit: "Whether it be the proper name I don't know tis what we call them & that you know is sufficient for us – they lye in little white notts of spittle on the backs of leaves & flowers. How they come I don't know but they are always seen plentiful in moist weather – & are one of the shepherds weather glasses." Beyond the rustic bolshiness there is a powerful cultural argument here. Woodseers means "wood prophets", and Clare, in standing up for the local name and its meaning, was also being a seer, and finding ecological common ground between different species of weather-sensitive creatures.

Clare was combative in his defence of vernacular names. He took on the Bard himself for appropriating the name cuckoo flower (forever an early-purple orchid for Clare) for lady's smock: "Let the commentators of Shakspear say what they will nay shakspear himself has no authority for me in this particular the vulgar wereever I have been know them by this name only & the vulgar are always the best glossary to such things." He sneered at Leigh Hunt's contrived "sparkler" for the wild pansy – "it's a consciet rather fitting a name for liquors than flowers". En route he used and helped conserve enchanting vulgarisms such as butterbump for the bittern, from its syncopated, booming call; bum barrel for the long-tailed tit, from the shape of its nest; and cock o'clay for the ladybird, which derives from another children's time-telling game, based on the direction a ladybird points when it perches on your hand. (Though the meaning of the insect's still-current East Anglian moniker, bishee barnabee, is impenetrable.)

Clare's respect for the authenticity of local language meant that he probably never made up a name himself. But in the heyday of natural history between the 18th and 19th centuries there was a frenzy of secular baptisms by clergymen, squires and every other kind of learned amateur with time on their hands. This was the period when many of our butterflies got their standard common names. Painted lady derived from the heavily made-up belles of the 18th century. Its wings have a warm flesh-tone and are tipped with mascara-like stripes. Red admiral (also the alderman) was coined because the patterning of its wings (patches plus stripes) resembles a naval flag.

The common names of moths – there are more than 2,000 British species, few of which had any names at all before the 18th century – have been more functionally descriptive (but rarely dull), and often based on minute differential markings. The Hebrew character is named from a dark hieroglyph on its forewing. Mother Shipton carries the image of an old witch with a hooked nose on its wings. (The original, famously ugly Mother Shipton lived in a cave in Yorkshire.) The litany of moths whose caterpillars feed on species of willow (aka withy, sallies, saugh, popple, cat's-tails) reads like a found poem about sensual pleasure: angle shades, autumn green carpet, canary-shouldered thorn, coxcomb prominent, dark dagger, dingy mocha, engrailed, flounced chestnut, pale brinded beauty, ruddy highflyer …

The invention of common names for moths continues among entomologists (partly for PR purposes) and now it's moved into the field of the micromoth, has become positively baroque. Recent gems include the large gold case bearer and the liquorice piercer. Mycologists are doing the same for the even greater numbers of fungi presently trapped with off-putting Latin IDs. Horse-whisperer Nicholas Evans may have been spared his headline-making poisoning two years ago if his field guides had carried the new coining deadly web-cap (from its covering of silky fibres) as well as Cortinarius speciosissimus.

Writers coin names, too. I've had a go myself, with "wayfrost" for the white rime of Danish scurvy-grass that edges dual carriageways in March. The poet and critic Geoffrey Grigson gathered up some 6,000 traditional plant dubbings in his seminal The Englishman's Flora (1958), and added a few of his own. He floated the splendid possibility of "tiger's teeth" for the flaming orange fang-flowers ("burning bright") of the South African crocosmias that are now widely naturalised across the UK. "Who cares if there are no tigers in the Cape", Grigson quipped.

Will Self's The Book of Dave (2006) imagines a Britain flooded by climate change five centuries hence. All that's left of central London is an island called Ham, where the local peasants' lives are ruled by the sacred notebooks of a demented 21st-century cabbie called Dave, and who use a whole new vocabulary. Self invents a convincing post-urban scrubscape of "blisterweed" (giant hogweed) and "roadie" (rhododendron). The inhabitants mount epic raids on the seabirds that nest in the remains of the City's skyscrapers ("stacks") – the "oilgulls" (fulmars) and "prettybeaks" (puffins). There's a local legend that if a climber falls from a stack, he'll be rescued by a formation of seabirds called a "choppa".

But it's kids that remain the real engines of invention in naming. Back in the late 1990s, I compiled a kind of Domesday Book (Flora Britannica) of the modern popular culture of wild plants in Britain. Cynics denied there was such a thing, but we had an overwhelming response from the public – children especially, who contributed hundreds of new vernacular names. They originated, as perhaps they always have, from a mash of mishearings, accidental and deliberate, plays with words, family and school-gang customs and patois, and wonderfully sharp observation. A toddler in Stratford-on-Avon felicitously mispronounced celandine as "lemon-eye". Kids in Clwyd rejected the adult demonisation of Japanese knotweed and affectionately dubbed it "German sausage", bringing together in one epithet the plant's speckled stems and the fact that they chomped on its edible young shoots. And the great tradition of bawdiness in natural namings hasn't been lost. Lords-and-ladies is already a splendidly smutty tag. It should properly be apostrophised, as the Lords' and ladies' (bits) – referring to the suggestively phallic flower-spike and its sheath-like hood. One inspired nine-year-old, who seemed to be aware not just of this but of the species' taxonomic family, had what can only be called a flash of inspiration, and dubbed it the "willy lily".

Scientists quite rightly insist that universal Latin names (though these are unstable now) are essential if people from different cultures and languages are to understand each other. But it's in the common English names that the real richness and fascination lie. Here are wild organisms' hues, habits, habitats, histories, and humans' histories and curiosity, too. It's not stretching meanings to say that the vernacular lexicon is part of the ecosystem, a living and growing web which links us with all other species.