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Some years ago, swag, or swagger would mean to boast.

Now it has a totally different approach- awesomeness, "coolness", or just slang for greatness.

Same with graze- going from eating grass peacefully to looking around a store.

So how exactly does this work? Does a council agree on it? Is it just gradual, in which nobody really notices?

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  • There is no divinely appointed body with absolute authority to say when a candidate must be considered a word, or when a sense must be added to the list a word already possesses. There are usage panels of linguists which are appointed by various dictionary boards etc. But, as you would expect, they rarely agree 100% amongst themselves, and rarely agree 100% with rival panels. So there must be a gradual acceptance, as new words and senses are added to different dictionaries at different times.
    – Edwin Ashworth
    Commented Dec 19, 2015 at 22:07

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This is something called semantic change or semantic shift.

It happens over time. No one agrees on changing the meanings of words. The meaning of a word changes depending on how we use it not the other way around. Language is usually formed around us; we don't form around it.

For example, the word Literally is

used for emphasis while not being literally true.

as defined by a dictionary. This is an example of how our usage of the world changed its official meaning.

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