Yet another in the long list of entries I've been meaning to write for a while now. Probably obvious, but I think worth mentioning:
It's important when writing to pay attention to levels of diction. (When I was first told this, I wasn't sure what "diction" meant. For anyone else in that boat, it basically means "word choice.") A given character (or narrator) should generally speak with a fairly consistent level of diction; a given character's diction may depend on their education, their culture, their locale, the people they spend time with, and their time period, among other things. An uneducated character who grew up in poverty in rural Victorian England is unlikely to use a lot of big words; a specialist in a field is likely to use the specialized vocabulary of that field; people who've been taught to speak formally are unlikely to use slangy constructions without irony.
Most writers have a reasonably good intuitive sense of diction levels for most stories, but a lot of writers get into trouble when they try to do dialect or period pieces. And when levels of diction get mixed up, the results tend to be laughable: if the tough street kid in modern NYC says "Golly, fellas," or "You're a spunky little gal," or "Prithee, sirrah, what say'st thou?", and it's not obviously an intentional authorial choice for comic or dramatic effect, it just sounds silly. (Syntax also varies among characters, of course, but diction is a little more obvious.)
I tend to think of character-appropriate diction as a filter placed over my vocabulary—a round sheet of metal, perhaps, with a particular pattern of holes in it, only allowing through those words that fit the pattern. That means, of course, that my vocabulary has to be a superset of the combination of the vocabularies that all my characters are likely to use (though I can get help with technical vocabularies from specialists in those fields), so knowing a lot of words comes in handy for this.
One note of caution about all this: it's easy to read advice about levels of diction as a recommendation for stereotyping, but that's not what I mean at all. The aforementioned tough street kid might be a much more interesting character than the generic tough-kid stereotype if he happens to be secretly taking night classes in nuclear physics, with a vocabulary to match. But that, again, is an intentional authorial choice; if you're doing it on purpose, for a good reason, mixing levels of diction (or using apparently inappropriate ones) is fine.