It works similar to renaming sheep, cows and other types of mobs except that it’s now possible to do with players as well. This could be useful if you want to give someone a funny nickname. Even though it’s tempting to go overboard, try to be respectful!
How does it work?
To use a name tag you first need to rename it to a name you want to use. In this case I decided to go for the name (or rather word) “Grandpa”. This is done by the use of an anvil and costs one experience point.
Once you’ve got your renamed name tag it’s time to use it on a human test subject. Long-tap on the player (or right-click if you are using a mouse) to get the option to name the player. As soon this is done he or she will be renamed.
The name will save for as long as you are in-game. Once the server goes offline (e.g. if the player host goes offline) it will reset all names.