Ah, words. They're the bricks and mortar with which a writer constructs his or her worlds, plots and characters. Choosing a word that's blatantly wrong can be, at worst, mortifying. The English language contains many homophones and near homophones (like accept and except), and a lot of people mix some of these up in their writing. Some of these words (affect and effect, for instance) overlap enough in meaning that even highly literate writers can get confused.
But these kinds of errors usually become less frequent with time and experience. Not all word errors are as blatant as these, and sometimes the "error" is in the eyes of the reader. One issue that comes up is the use of what some would call an "inflated" vocabulary and others would call " normally literate wording" in their writing.
I recently ran across a thread on a writer's forum where the original poster asked how to increase his or her vocabulary. An innocent enough question, and of course the "best" answer is to read voraciously and about a wide variety of topics. Research has shown that people (both native speakers and English learners) tend to gain a substantial amount of their functional English vocabulary by contextual exposure to words in reading.
This corroborates my own experiences. I actually have a very clear memory of learning what the words laconic and pedantic meant via encountering them in books I was reading back when I was a kid. Both of these are words that some might consider closer to fifty cents than nickel level, but they've served me well in my adult life.
Interestingly, though, a lot of people suggested that the person posting the question in the thread simply use a thesaurus. Other people suggested that fiction writers should always use the simplest vocabulary possible. One person even bragged that he/she "never" used "fancy" words, because he/she didn't want their readers to get the wrong idea about him or her.
I think both of these pieces of advice are bad if taken in the wrong way.
Picking up a thesaurus just because you want to find synonyms for relatively common words is generally not a great idea. Often the simple, everyday word for something is the best choice. For instance, a horse can also be a steed or an equine. But most of the time, horse is the best word for a horse. Then there are those more contextual synonyms. Words like gelding, mare, colt, filly, destrier, pony, charger, palfrey and so on all refer to specific types of horses that may or may not be appropriate in a given context. A typical thesaurus lists all the synonyms but does not hint at connotations or contexts. If you refer to a little girl's pony as a destrier or a charger, you'd better be shooting for an ironic tone.
But a thesaurus can be useful if used in an informed way. Sometimes I'll bring one out if I need to be "reminded" of synonyms I actually know the meaning of. But just randomly selecting words leads to the "smirk" phenomenon I encountered a while back. A character greeted another character with a friendly, open smirk.
Smirks are not, by definition, friendly or open, because of course, smirk is really not a synonym for smile. It's a particular type of smile, and one that is not at all nice. Calling an ordinary smile a smirk is like calling a girl's pony a charger.
Also, readers notice uncommon words more. Smirk is probably not a word I want to see more than a handful of times in an entire book, even when used correctly. My hand starts itching to slap somewhere around the third or fourth time a villain smirks. Aside from being very annoying, a "strong" word like this creates a pretty clear impression of a person. Once I know someone's a smirker, I don't need to be reminded of this every scene.
But going back to the other extreme piece of advice, which was to never use less common words. Aside from insulting the ability of readers to pick up on word meanings via context (which, after all, is how we all learned to talk), this piece of advice ignores the importance of using words to set voice and tone, whether authorial or character.
In short, if your character is a medical doctor, she'll probably use some "fancy" words to describe body parts and whatnot, even when she's not in a medical setting. And a character who is an auto mechanic may know and use a lot more words related to motors and engine parts than someone who isn't. And in general, a character who is educated, well-read, or even just of a whimsical bent, will use language differently than someone who is less so.
If your narrative is "in point of view," then it should reflect this to some extent.
But of course, an author has to exercise restraint, even when writing in point of view. A story with a medial doctor character needs to include believable language usage and terminology, but the writer needs to introduce these words carefully and use them in a way where their meaning is contextually clear, or defined. And it's probably not a good idea to dump a ton of these words out in a single paragraph, unless the intent is to illustrate confusion (for instance, the pov character is talking to a doctor over dinner and is being bombarded with a bewildering array of terms he doesn't understand).
But aside from the obvious issues of the role of word choice in characterization, mood and tone, the advice to categorically avoid "big words" is a bit troubling. Going back to the "creating the wrong impression about me" line. What would that impression be? That you're an educated and intelligent person who knows how to use appropriately chosen words with care and precision to evoke a nuanced meaning or mood? Why is coming across as being reasonably educated creating a bad impression?
Of course picking words willy nilly from a thesaurus is a terrible idea, as is using the most obscure and complex words available "just because." It's something students sometimes do in their essay writing because they mistakenly think that doing so will make them look clever. But there's a big difference between doing this and picking that perfect word for what you're really trying to say.