What is co_names?

As other’s have already said, this seems to be a documentation error. The documentation for code objects clearly contradicts the documentation for inspect:

co_varnames is a tuple containing the names of the local variables (starting with the argument names); […] co_names is a tuple containing the names used by the bytecode;

Also, accessing the attributes co_names and co_varnames of code objects conflicts with what was stated in inspect:

>>> def f():
...     a = 1
...     b = 2
... 
>>> f.__code__.co_names
()
>>> f.__code__.co_varnames
('a', 'b')

Furthermore, comments in the source code for CPython’s compiler explicitly mention that co_varnames is for local variables:

PyObject *u_names;     /* all names */
PyObject *u_varnames; /* local variables */

The reason you don’t see co_varnames is because the above code is initializing attributes for the compiler object that Python uses to compile code. u_names and u_varnames are both later passed into PyCode_New – the constructor for CPython code objects:

names = dict_keys_inorder(c->u->u_names, 0);
varnames = dict_keys_inorder(c->u->u_varnames, 0);

...

co = PyCode_New(..., names, varnames, ... );

And PyCode_New assigns names and varnames to the co_names and co_varnames attributes respectively:

Py_INCREF(names);
co->co_names = names;
Py_INCREF(varnames);
co->co_varnames = varnames;

If you already have not, I suggest filling out a bug report at bugs.python.org to let the Python development team know about this inconsistency in the documentation.