Knowing a word and its definition is not the same as using it daily, in writing or verbally.

If I give you eight random letters and ask you to create words with them; if it's in a language that you use daily, you'll first see the ones that you use the most, not the longest/more complicated ones. Whereas if they should be picked from a dictionary, I can see that it could be easier to find long/complicated words, since you won't have a notion of "popular" words.

Being able to explain the word is a common house rule. The official rules only state that the word must be in an agreed upon standard dictionary (plus a few exceptions, like no abbreviations), which is the official Scrabble dictionary for competitions. As long as you can point to it there when challenged, you're good.