Starting with a 1-letter word ... I'll enter the word:

A

and then the number of letters the next entry has to be:

2.

The second person enters a two letter word, like:

IT and then a 3 for the next person telling them how many letters their word should contain. When no more words can be thought of / entered ... the person enters "I give up!" and starts over again with a one-letter word.

Might be fun ... who knows.

Okay, consider the one and two letters words done ...

Next person needs a 3-letter word!

3