this approach creates some fairly obvious problems, especially if one rejects chomsky's competence/performance distinction and acknowledges that people have disputes and confusion about what words mean all the time.
a great example (and a hilarious invented usage!) is the verb 'to doug,' which has been widely circulated in my co-ed house here at brown. it's a humorous adaptation of existing linguistic material (namely Doug's name), and I think it orginated in the passive form: "you've been douged!".
i don't provide the definition or the exact origin story because these are both somewhat disputed. there are at least two origin stories floating around (and I personally believe the meaning may have been added as an afterthought to the utterance anyway). this is a pretty common case in normal language, too. consider all the idioms we use daily without knowing their origins (let the cat out of the bag? what!?). in addition, there are certain fine points of usage that people don't agree on. for example, can only Doug doug? does douging have to be an unintentional act? and so on.
now, for all this fuzziness and lack of formal definition, there are some amazing consistencies in the usage of 'to doug.' i presented some house members with fill-in-the-blank sentences, and their answers were very elucidating. for instance:
"He ____ her too often for comfort."
- dougs, douged
"Tom ate all of Dick's food without realizing it was Dick's, though he knew it was not what he, Tom, had ordered. What a prototypical _____!"
"In fact, Tom engages in ____ almost daily!"
- douging, dougage, douggery
so, how can we account for both the inconsistencies and the consistencies with one theory? should we, like chomsky, ignore the 'anomalous' utterances that don't fit with our rigid structural categorization of 'to doug'? should we declare speakers who don't know the 'real' meaning incompetent, and imagine a perfect, ideal speaker who has a perfect representation of the meaning of 'to doug' in her head? how can such a 'real' meaning exist for a word that was made up mere months ago?
this is why usage-based theories of grammar are so freakin' sweet! if we appeal to actual observable facts about usage, a lot of these issues fall out very neatly indeed.
a word's meaning is a function of the way we (average speakers!) use the word. scratch that--everything (syntax, spelling, pronunciation, meaning) are functions of usage!
that is, i heard a friend say 'you've been douged!', and because i am a native english speaker with experience with sentence frames like this, i knew 'doug'--regardless of its meaning--must be a verb that can take a direct object. then i saw a friend's t-shirt (this is a real thing), that says 'See Doug. See Doug doug. Doug Doug, doug!' and understood that 'to doug' is a regular verb just like the other verbs i've seen in that type of sentence my whole life. then, i heard a friend say 'i'm going to doug you!' and another friend say 'you can't--if it's intentional, it's not douging,' and i understood something new about the meaning of 'to doug' and the appropriate contexts for its use. on the back of the aforementioned t-shirt, it says 'you've been douged!', so i assume the past perfect (or whatever) form of the verb is spelled with one 'g.' enough counter-examples, or a counter-example from a particularly reputable source, might lead me to change this mental representation, though. (at this time, the t-shirt is the most reputable source available.)
when we learn a new word, we don't learn it all at once as an ordered triple, and its meaning isn't necessarily part of the original package. what we learn about words is ways that they might be used. these ways include syntactic and phonetic contexts as well as real-world contexts including socio-linguistic factors like social acceptability, formality levels, and so on. meaning falls out as a result of contextualized usage. we can explicitly define the word, as is done in dictionaries, but this is a) not necessary (as in the case of douging) and b) it still constitutes a particular type of context. we never--NEVER EVER--encounter words without a context that tells us something about their acceptability!
usage-based theories can empirically use statistical distributions to explain certain facts about language. for instance, the mass noun form of the word, 'douggery' or 'dougage', is not exactly disputed, but it's generally not that well known. this might be because it's very infrequent. we would expect this form to be less stable, less well-defined and more prone to change over time, because speakers have a weak representation of it in their brains. they haven't stored up enough examples to know how to use it properly in all situations. the phrase 'you've been douged', however, occurs very commonly and is therefore unlikely to be changed or used differently. spelling is another good example--there aren't enough instances of the written word yet to know whether one 'g' or two is more acceptable.
people can and do make mistakes in language. this is how language changes, and why we are sometimes not understood. usage-based grammar can explain both our competencies and our incompetencies using a very simple apparatus: we store and compare each example of a word we encounter. in addition, it explains our messing-up without appealing to a hard and fast prescriptive distinction between right and wrong. instead, different tokens of the same word are simply more or less acceptable.
an invented usage like 'to doug' is a great example because of its unsolidified state, but in some ways it's just like any other word; the same arguments i've made here can be applied to all language in general. now, go out there and try not to doug one another!