§7. In the practice of the use of language (2) one party calls out the words, the other acts on them. In instruction in the language the following process will occur: the learner names the objects; that is, he utters the word when the teacher points to the stone. (Cp. §26)—And there will be this still simpler exercise: the pupil repeats the words after the teacher—both of these being processes resembling language.
We can also think of the whole process of using words in (2) as one of those games by means of which children learn their native language. I will call these games "language-games" and will sometimes speak of a primitive language as a language-game.
And the processes of naming the stones and of repeating words after someone might also be called language-games. Think of much of the use of words in games like ring-a-ring-a-roses.
I shall also call the whole, consisting of language and the actions into which it is woven, the "language-game".
This is the first appearance of the phrase 'language-game'. He is emphasising that if we just look at the symbols (or the sounds), consider that to be the language, and then look at the world, and then consider that the symbolic system corresponds to aspects of the world, and leave it at that - as in his Tractatus - we are deceived. In that analysis, people did not appear; the community of users was irrelevant. Sure, they used the system - but the system itself was self-contained, making complete sense regardless of the people. The symbolic system was linked to meanings (perhaps in people's minds, or in dictionaries), and to the world. The rules for which words were linked to which meanings were inhuman. W. is going to head towards another extreme - he is an extremist, in this as in other aspects of his life. The symbols and the world are now to be considered along with the users; without the users, there is no system. All the things that people do with the words as they interact both with the world, and with each other, are inextricably part of the working of the system. This is a holistic view.
He chooses the word 'game' because a game often inextricably involves symbols, the world, and people. It is not so much that the symbols and the world provide a system (the game), which people can then use; rather, the people, as players of the game, are an essential part of it.