If you are raising a toddler, it is important that you keep an eye out for his language development milestones. By the age of three, a child should have certain language skills ranging from the size of his vocabulary to how he actually uses language. If you are aware of these milestones, you will be able to tell if your child is developing at a normal pace or if he is lagging behind.
A three-year-old should have a vocabulary of around 1,000 words. Of course, it is not feasible for you to count every word in his vocabulary, but you can estimate by talking to him -- a 100-word vocabulary sounds dramatically different from a 1,000-word vocabulary. Basically, a 3-year-old should be able to label most of the basic things around him, like doors, pens, computers and beds.
Pronouns and Prepositions
A three-year-old should be using pronouns correctly, understanding that "he" and "she" are gendered pronouns while "it" is not. She should also have a few prepositions under his belt, such as "in," and "out." These fit with the general theme of simple, functional language that most three-year-olds have.
While a two-year-old has a vocabulary largely consisting of nouns, a three-year-old should be starting to make sentences. This means that verbs are going to be much more dominant as he talks about things that are going on around him rather than just labelling objects. You can quickly test this by regularly asking your child what he is doing -- if he says "walking," or "eating" rather than "shoes" or "food," then he's on the right track.
A three-year-old can answer some, but not all questions, even though she probably understands more than she speaks. She should, however, know her name, age and sex, and be able to answer questions that require slightly higher cognitive reasoning abilities, such as "what should you do when you're hungry?" She should also be able to tell you stories about things she did during the day.