Conversion is a linguistic process where a word changes its part of speech without changing form, such as the word "work" being used as both a verb and a noun. Palimpsesting refers to changing the context or meaning of something that already exists, similar to how palimpsests involve scraping off and reusing manuscripts. The document argues that culture is palimpsested through the process of conversion, where the original meaning or paradigm of something persists but the surface level meaning changes based on new contexts and intentions.