What does it mean if a child invents words while talking?

Depends....: If it's a toddler or a very young child, it is age appropriate behavior and will go away as s/he masters speech better.

In psychology, : "neologism" is the use of words that have meaning only to the person who uses them, independent of their common meaning. "Coining" new words occurs both in typically-developing children & in children with Autistic Spectrum Disorder. If you are concerned about the child's social, communicative & sensorimotor skills, have his pediatrician use age-appropriate screening tests to advise you.