Nirukta serves the purpose of a Vedic dictionary, or "kosa". A dictionary is also called a "nighantu", which term is used in Tamil also. Nirukta, which deals with the origin of words, their roots, that is with etymology, is the ear of the Vedapurusa. It explains the meaning of rare words in the Vedas and how or why they are used in a particular context. Many have contributed to Nirukta, the work of Yaksa being the most important.
Take the word "hrdaya" (heart). The Vedas themselves trace its origin. "Hrdayam" is "hrdi ayam" : it means that the Lord dwells in the heart. "Hrd" itself denotes the physical heart. But with the suffixing of "ayam" - with the Lord residing in it - its Atmic importance is suggested. The purpose of any sastra is to take you to the Supreme Being. "Hrdaya" is so called because Paramesvara resides in "hrd". Thus each and every word has a reason behind it. Nirukta makes an inquiry into words and reveals their significance.
"Dhatu" means "root" in English. In that language one speaks of the root only of verbs, not of nouns. In Sanskrit all words have dhatus. Such words, transformed or modified, must have been adopted in other languages. That is why we do not know the root of many words in these tongues. After all, such an exercise would be possible only if the words in question belonged naturally to them. Take the English work "hour". Phonetically it should be pronounced "h o u r" ("h" being not silent) or "h o a r". At one time the word indeed must have been pronounced "hoar". "Hora-sastra" is the name of a science in Sanskrit, "hora" being from "ahoratram" (day and night). "Hora" is two and half nadikas or one hour. The English "hour" is clearly from this word. In the same way "heart" is from "hrd". There are so many words like this which could be traced to Sanskrit. It must have taken a long time for words in other languages to evolve into their present form. That is why those who speak them find it difficult to discover their origin [or root].
How does it help to listen to someone speaking a language without understanding what he says? It is as good as not listening to him. In other words it is like being deaf. Nirukta finds the meaning of words by going to the root of each. That is why it is called the ear of the Vedapurusa: it is the ear of Sruti which itself is heard by the ear.
Western scholars learned Vyakarna and Nirukta from pandits in Kasi and acquainted themselves with the origin of words as described in the latter sastra. From this they developed the new science of philology. It is primarily from our Vyakarana and the Nirukta that the linguistic science has developed.
From their researches, Western scholars have arrived at the conclusion that all languages have one source. People all over the world are the descendants of the original inhabitants of the area where this primal language was spoken. There are differences of opinion with regard to this area, the home of this tongue. We need have no worry about it. After all, we believe that all places on earth are our home. "Yadum mure!" is a famous Tamil declaration. "Svadeso bhuvanatrayam" - the three worlds are our motherland.
For a general background, please see here