Ayn Rand defined this for everyone in her book "Introduction to Objectivist Epistemology". Formation of concepts is discussed in detail there.

Existence exists; Only existence exists. We exist with a consciousness: Existence is identity: Identification is consciousness.

Concepts are the units of Epistemology. Concepts are the mental codes we use to identify existants. Concepts are the bridges between metaphysics and Epistemology. Concepts refer to the similarities of the units, without using the measurements.

Definitions are abbreviations of identification. The actual definitions are the existants themselves.

Language is a verbal code which uses concepts as units. Written language explains how to speak the phonemes.

Language refers to remembered experiences, and uses the concepts which are associated (remembered) with the units of experience as units.

Using language is basically reporting your inner experiences using concepts as units.

The process includes, observing, encoding, by the speaker. Encoding, Speaking (transmitting) .... receiving, hearing, decoding the general ideas, contextualizing, integrating into the full world model of the listener. Finally the listener will be able to respond from his updated world model using the same process as the original speaker.

This process is rife with opportunities for mis- understanding. However the illusion of understanding is what we are left with.

This is generally not known or understood.

The only solution is copious dialog, to confirm that what was intended is that which was understood.

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