Well, what you describe only happens when the nobility is a genuinely different people from the commoners.
The difference between a language spoken by a people and a subgroup there-of(like nobles) is usually that the subgroup uses different words, but not a whole language all-together. In a society like western society today where people are able to become whatever class they want as long as they work for it, you mostly notice this in the use of 'fancy' words.
But a completely different language would be like the Jews with their Yiddish. They were a completely different people, completely different culture and religion and on top of that, they were gettho'd(is that a word?).
Then there's things like, the invasion of Great Britain by the French, they took control, and happily kept speaking their own language, which is why modern English contains so many words of French origin.
And then you'd actually get to proper etymology.
Toady would have to write a system that would first create some base-languages, then when those entities spread out, the language spreads out. When isolation happens, the local language starts modifying itself(idealy based on what kind of things are important to the community, a sheparding people use different words then a seafaring people). When one entity conquers the other, the conquered might not speak that language straight away(unless that happens to be some mandate) but the vocabulary of one language may bleed into the other. This would also happen in cities where people are constantly confronted with foreigners, like a harbour or a capital.
Of course, in the end you have to ask yourself: What would this mean for the gameplay? That every three villages you visit have a different dialect your adventurer would have to get used to? A separate skill for every formal language in a world? Or just ignore it in it's entirety? (Or maybe that you don't have to pay attention to the languages for conversation purposes, but perhaps having to do so to figure out writings you'd find on tombs and old books)