Chemistry was a young scientific field in the 1500s, so the locals couldn’t have known exactly what they found. They did notice one crucial fact about the new material: the graphite made a darker mark on paper than lead, which had been used in styluses since Roman times. So they called it black lead. English people cut graphite into chunks and put it into sticks that could be used to write. They wrapped the sticks in paper or string and sold them on the street. This new tool was called the pencil—a name derived from pencillum, the Latin for a fine brush. Making your mark would never be the same.
An excellent primer on the history of the pencil.