The term "Language" on Erfworld refers to a language that is commonly spoken at least by some members of all sides in the geographical vicinity of Gobwin Knob. "Language" is similar to English on Earth, and more closely similar to Common in Dungeons and Dragons. Not everyone on Erfworld speaks Language. For example, Vurp informs Parson that not all the Hobgobwins who live in Gobwin Knob do so.
Since Units pop as adults, they are all created knowing at least one language. The fact that they are not all created speaking the same language is probably a feature deliberately designed into the system by the Titans. Perhaps some tribal languages were designed to facilitate specific tasks. For instance, maybe Marbit and Gobwin have many terms useful in mining. It's also possible that different sides were given their own language in order to make it easier for said sides to keep secrets from other sides. It's possible that Thinkamancers can't read the mind of a unit if it's thinking in a language which the Thinkamacer does not know.