In most situations I would agree with the previous responders, but I enjoy designing, running and playing in rich settings, so I'll play devil's advocate. Here are a few questions I would ask before deciding how much "jargon" to put into my setting:
1. What's the return on investment?
Before you spend too much time fleshing out your setting, understand that different players will accept different amounts and types of "set dressing." One player at your table might not care at all, and say "Let's go to the Dwarven country." Another might dig right in, and be able to tell you that his character is the sole descendant of "Lord Masten, founder of Mastinor and the only Dwarf to be declared 'Aulfdar,' a politically loaded title that is comparable to the word 'fuhrer' in German."
So take a look at the composition of your gaming group and figure out where the players lie on a spectrum from "doesn't care about these weird names" to "will compile my setting notes and publish them after I die." This should tell you how much enjoyment your group will get from the work you put in to detailing the setting: don't forget that you're part of the group too, so if designing and running a detailed setting is one of your favorite things about being a DM then factor that in as well. However, you need to make sure you've carefully considered the next question...
2. What's the price of admission for your players?
If you think that you and some of your players will get a lot of use out of unique names for campaign elements, then go for it...but don't do it in such a way that other players at the table are going to be behind the curve because they aren't guzzling your Potion of Immersion. There should be fine details for those who want them, but if one player at the table has no idea that he's addressing the Elven King because you only call him "The Triedel" then you have a problem. You're probably the only person who will ever be able to converse authoritatively on your setting using entirely setting-specific language, so don't get stuck too much in your own creation: you have night vision goggles, but your players only have flashlights.
3. How do you plan to get your information out there?
No matter how much your players love your richly-described fantasy world, none of them are going to read 100 pages worth of Homebrew Gazeteer, and if they did then even the most obsessive of them wouldn't retain enough information to make a difference at the table.
Setting details are best released in small doses, preferably in-game, and reinforced by concise documentation. For instance, tell the group that they've been surrounded by agents of the Eladrin secret police. Let one of the agents say "Nobody escapes the watchful eye of the Scáth Amharc Ar." Then provide a glossary-style entry for them on a campaign wiki or in a campaign notebook that is available to the players. Those players who care will have their characters whisper in the tavern for fear of Scáth Amharc Ar, and those players who don't care will at least know that the Eladrin have a secret police force and that they can't escape its watchful eye.
Postscript
I'm surprised by the general response to this post. The XKCD cartoon is hilarious, but it presents a probability curve, not a hard and fast rule: The Lord of the Rings is an outlier, and we're not talking about books, but an RPG setting, so expectations and qualitative evaluations will vary greatly from group to group and player to player.
The "call a rabbit a smeerp" trope is a very extreme example: I wouldn't advocate renaming the woodland critters of your campaign setting, but naming the Eladrin council adds a layer of creative detail to an important element of the campaign. It's perfectly fine to call Gordon Brown "the dude in charge of England," but he's actually "Prime Minister of the United Kingdom," and if my World of Darkness character ever meets him in-game then I'll role-play him accordingly. The relative importance of the subject should be the designer's criteria when it comes to choosing which elements to rename in their setting.
And lastly, I expect different things from a "Knight" than I do from a "Samurai." They're functionally comparable but each word comes with a plethora of cultural and even practical implications that inform the reader's perception and experience of the subject. To say otherwise is to endorse a view of creative expression that is, at best, unsophisticated.
Good luck with the world design and new game, Chaoszero! It's a lot of work but it can be fun and rewarding. Let us know how it goes.
