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Baby "Talk"

According to the American Academy of Pediatrics, by the end of 2 years of age your child should be able to:

Point to object or picture when it's named for him
Recognize names of familiar people, objects and body parts
Say several single words (by 15 to 18 months)
Use simple phrases (by 18 to 24 months)
Use two- to four-word sentences
Follow simple instructions
Repeat words overheard in conversation

Babies and toddlers have the ability to sign even before they can speak. Studies show that this type of stimulation helps with your baby's language development. In addition to signing with your baby, you can help their speech development by babbling with them. These products offer parents help in developing their baby's speech development.

In addition:

By the end of the third year, your child will be able to follow an instruction with two or three steps, recognize and identify practically all common objects and pictures, and understand most of what is said to her. She should speak well enough to be understood by those outside the family.
By the end of the fourth year, your child asks abstract (why?) questions, and understands concepts of same versus different. She has also mastered the basic rules of grammar as she hears it around her. Although your child should be speaking clearly by age 4, she may mispronounce as many as half of her basic sounds; this is not a cause for concern.
By age 5, your child should be able to retell a story in her own words and use more than five words in a sentence.