Manually coming up with names for places, people and other entities can be difficult. Ensuring that those names are believable in the context of the usage they are put to, even more so. Random generation is one approach that can ameliorating this work and difficulty. Generating random names for instanced entities can be used to create a sense of 'ownership' of the entities in the player's mind: the random names of soldiers in X-COM:UFO Defense being the most well remembered example of this.
The names chosen can be influenced by or even determine the attributes of the item. As an example, the names given to an item in Diablo determine what mods the item has.
The name for an item may come from the player, then be used to determine the attributes of an item. Many of the TIG-PCG entries generated unique worlds by asking the player's name and seeding the RNG with it. A slightly different approach is used by Treasure of the Rudras, where the player-entered name of the spell is parsed into prefixes, base, and postfixes to select the effect of the spell.
These algorithms are used to randomly generate names:
Given an understanding of the reasoning thought to be used historically in naming, a simulation might name entities in line with that reasoning. For instance, if place names were in need, toponomy might be used to guide generation of suitable names.
PCG Wiki References
Toponomy - Wikipedia article on Toponomy, the scientific study of place-names.
Toponomy, or How to Name Places! - Cartographers' Guild thread on toponomy.
Random name generation - RogueBasin wiki page on random name generation.
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