My little darling makes up words for things she doesn't know the words to, it is normal (apparently) so don't worry too much, it shows a good imagination and a desire to communicate. Her favourite at the moment is to tell me that something is bingley or scrobbly. A good way to break this gently is to never use baby talk - call a cow a cow rather than a moo-moo or moo-cow. If you don't know what something is called, tell them you don't know, and go find it out together. Try not to use different words for the same thing, like toilet or loo or bathroom or john, or potty or crapper or bog or whatever the heck you personally call it, it just causes confusion, and the child will get stressed out if you say go to the toilet when they are used to calling it the loo.
If communication with others is the problem, you really need to get out more! My cousin spoke with such a regional accent (pure Dorset - all ers and ees) taken straight from his mother and grandmother, that when he went to school, just in the village, they had difficulty understanding him. He was very sheltered when a toddler, and wasn't allowed out without his mother. There were no nurseries, playgroups or kindergartens there, and he was totally isolated really. He just didn't have anyone to talk to who didn't have the same accent - even mine was rather pronounced until I went to the local grammar school. I still use Dorset words now, and it confuses Phoebe when I say gurt instead of great, meaning big, or yer for here.
On the whole, the more you worry about it, the worse it will feel to you. If your son is getting distressed that no-one understands him when he needs to be understood (food, drink, love, toilet, that sort of thing)then you will need to start thinking about how you talk to him, and how he makes himself understood without language. But most of all, don't let him feel that it is a bad thing, don't make him feel inadequate because no-one understands him, understanding is a two way street and others have to start meeting him halfway down it.