Once you've found a Lost Word while playing a level, you need to inscribe it. Use the Library button at the bottom of the Home Screen to travel to the Library.:

Once in the Library, tap the floating book to enter the bookshelf. The book-button will have a red dot if you have any Lost Words to be inscribed, or if you have any new books of Lost Words that you haven't looked at yet:

Once in the bookshelf, any book with a Lost Word to be inscribed will have a red dot on it. Tap the book to open it:

Once the book is open, you will see the uninscribed word by the gold triangle pointing towads it. Simply tap the word to inscribe it:

Lost Words that have already been inscribed are larger, emblazoned in gold, and have a little check mark by them.

If you have additional Lost Words to inscribe, you'll see the "NEXT" button at the bottom of the book that takes you to the next book with a word or words to be inscribed.

Inscribing words give you 10 bonus coins!