This is not the only technique for naming, potentially there are hundreds of approaches. People want novelty, difference and new experience. Stale, tired, and well-worn words don't deliver newness. When you take an existing word and give it a novel twist that makes it suitable as a name, you evoke a sense of familiarity blended with freshness and create uniqueness. Freshness promises new experience.
Familiarity overcomes the fear and suspicion usually directed at strange and unknown entities.
And uniqueness enables the name to stand out in the mind without being confused with other names. At once it is fresh yet familiar and unique and memorable. Manufacture a new word out of parts of existing words. Next to the method above, this is probably the next most common way new words are formed - existing words are combined with other words. For example, bedroom is a combination of two words, bed and room.