In Semiotics, you learn that word creation is mediated by a language's need for a new word.
Words are created according to a need but this process also had a lot do with the culture that demands it. For instance, "moon-landing" was created in the 1960s, after humanity made its way out of the Earth and landed on the moon. A word like, with the meaning we attribute to it these days, that would not make sense in the 1600s or, better said, it would be a complete fantasy.

Words are usually formed whenever an "original" word ceases to be able to describe two things. For example, romance languages have two distinct "to be" verbs and the Finnish language does not distinguish genders. In the first case, there was a moment in the history of those languages where "to be" was working for some cases, but not for others, hence the need for a new verb. For the Finnish language, there has not yet been a need to distinguish male or female, so the same noun is used.

Usually, this process happens with greater intensity in the early stages of language formation and, for modern languages, it coincides with the 1500s. Most of the writers during that time (like Shakespeare in England, Cervantes in Spain and Camões in Portugal) were presented with a vocabulary that was mostly composed of colloquial and regional expressions, meaning that, in the same territory, you could have word x and word y being used to signify the same thing (this still happens). Sometimes these pre-existent words lacked the poetic intensity or simply did not contain the meaning the writer expected it to, so they came up with a new one by themselves that would condensate all of this. This was usually done by looking into latin or greek word formations which ultimately modernised and elevated the quality of these languages by providing them a "method" for word creation independent of colloquialism—which was what happened during the middle ages—that also put it on par with classical culture.

The initial response had a few assumptions about "higher" language, but I seem unable to reply to it, so I'll leave an answer here. Part of my response was in conversation with theirs, so to begin - Shakespeare and other similar influential wordsmiths of the 1500s were at least in part so influential because they coincided with the advent of print media in common languages, which then led to the development of things like spelling conventions, the development of literary dialects, and the elevation of some of the great writers of that time (think Pushkin, Shakespeare, the King James Bible, Cervantes and many more). These writers were influential because they were amazing, but they defined the language that followed and are credited with the creation of language in large part because of the time they happened to be writing in.

The previous post had suggested that people used Latin and Greek borrowings in English, and that this elevated the language in some way (I forget the exact words used. I would counter that actually the use of latin and greek was at least in part because of widespread fluency with those languages within a certain class of people (as higher education at the time and place was heavily reliant on these languages). We attribute thousands of words and expressions to Tyndale, who was basically just trying to say what he needed to say while translating. In other locations (for example Pushkin), languages like French were drawn on, again because of widespread bilingualism in the target audience. the "elevating" of languages was in many ways done by adding in words that sounded elevated to those who had knowledge that they thought of as being elite or elevated.

Looking specifically at periods of word creation, here's a few:

• periods of cultural contact - the settlement of the Americas, the Norman conquest of England, Roman conquest of the Gauls.
• periods of literary production - the early years of the printing press, the advent of the internet
• changing styles of literature - the birth and growth of rap music
• cultural change or adaption - religious movements, or the translation of major religious (and other) texts.

Whether words are created or borrowed can really depend on the context, as some cultures borrow everything, while others are happy to create all new words (Ojibwa being an example). Sometimes the same language will make opposite decisions in different locations (North vs South Korea - the North uses native coinings, while the south borrows or retains borrowings from China and English).