DD 2.10 making up words

[minicorrect]

DD1 was a late talker and didn't really start until after her 2nd birthday. However, once she started she was pretty much forming sentences straight off and can now hold proper conversations. Her vocabulary is wide and we are occasionally taken by surprise if she doesn't know the meaning of a word rather than the other way round.
Recently, she has started making words up; eg mummy please pass me the krugalar - pointing to an imaginary object.
Everyone keeps telling her off for her baby talk when she does it. Maybe I'm being a bit pfb about this but I can't help thinking this is quite clever as it shows that she is confident enough in her language to be able to add her own language into sentences in contextually appropriate ways. Should I encourage it like I have been or chastise her like everyone else?

My DS does this all the time. He's 3.8 though so has a full vocabularly. He just does it because he thinks it's funny.

My DS was also late to talk, made up his own words and at one point seemed to have developed an entirely new language! He'd come up to you and recite a string of something unintelligible, then repeat it when you said 'pardon?'

He clearly understood what we said to him, and a few months on he finally started to speak clear English in full sentences.

A slight note of caution though. He was diagnosed as being on the autistic spectrum when he was 12, and those language 'quirks' are common to ASD.
It fortunately doesn't have a huge impact on his day to day life these days, but it made sense of his early development for us.

It's relatively normal. As a nursery nurse, I've worked with hundreds of children and around that age, it's not uncommon to hear words that make no sense. Other children can pick up on it and they find it funny using a 'made up' word when communicating with each other.

It's a phase that will pass. Try not worry to worry too much and ignore the people who comment on it.

Yes, DD thinks it's funny, especially if I respond accordingly. She might ask: mummy what's a cannar? And if I say well it's a cannar she laughs hysterically.
As we don't know many other children her age it's hard to know what is normal. My parents keep telling us she's bright but I think their memories of what is normal for her age may be hazy! A childminder friend has also commented though so perhaps she is a little bit above average! I guess I'm just worried about telling her off for something that is just normal development as I don't want to get it wrong! See it is pfb isn't it!

You're not being pfb at all! We follow a strict curriculum and one of the statements about children your DD's age says -

"create personal words as they develop language"

it's something within the early years curriculum. Absolutely nothing to worry about! If you don't like it much, when she starts talking about a word that's made up just start aconversation about something real.

It will pass :)