Though regarding context - if people read books, they come across words they don't know. I don't pick up my dictionary at every new word . . . I think most of my friends read SF & F often enough to be familiar with made-up words and can guess from context, so maybe I expect that to apply in mundania too?

I'm right there with you on that--it always bugs me when people can't figure out what a made-up word means from context and parts of the word. Spec-fic words always come from somewhere! This is actually where I most often apply my Latin: I can make up words that sound like real English by modifying a related Latin term.

I might be biased, but it's been my experience that people who read a lot of spec-fic tend to be better at things like that. People who read books solely based in the real modern world aren't as good at using clues to derive a whole, whereas that's what we do all the time in spec-fic. (I was the only spec-fic reader in a book group once. They had serious trouble with the fantasy book I picked, and every other book we read was either modern or recent history. Needless to say I wasn't in it long.)