Toddlers of the same age group generally develop their speaking capacity at different stages. Some have an uncanny capacity to speak like a parrot at an early age, while others of the same age are only able to mutter some illegible sounds. While there are others, in between this age group, who are at different levels of speaking capacity, ranging from a legitimate few words to short sentences.
Toddlers between 2 and 3 years of age are normally able to speak and understand some words ranging from a few words to short meaningful sentences. It is a normal thing but if they are unable to speak any words during this age, then they need your special attention or professional helps. However, all types of toddlers stand to gain if you spend more time to talk to them and also train them to speak on every day situations.
Toddlers are very eager to imitate sounds that they hear all around them including the words their parents and siblings speak at home. Here, they automatically pick up some words and learn to speak them. They may not really understand the meanings of all these words, and you can train them to speak meaningfully and also understand the meaning of what you say to them.
Toddlers about three years age are able to make sounds of easily pronounced sounds of the alphabet but are still unable to pronounce complex sounds made of letter combinations, which they would pick up later. However, by this time they should be normally able to identify simple things such as basic colors or some house hold items when you ask them to point out these things.
Small babies respond easily to sing-song words that their parents use to speak to them, but toddlers need something better than that. They should be spoken to in normal tones, repeatedly and in short sentences containing a single idea. May be some of the words you speak are incomprehensible to the kids but they will be prompted to assist the meaning of these words by using their imagination and your prompting.
For example, if they are eating a cookie, ask them how it tastes, and what its name is and, so on. Also, talk to them about things that they are interested in. In this way they will be prompted to learn new words and understand their meanings by using their imagination and intuition. You can also speak to them about things you are doing.
Additionally, ask them some questions to which they have to answer in short sentences instead of just saying yes or no. Also, try to complete their unfinished words or sentences for them, repeatedly if necessary, so that they can learn to fully understand and speak these new terms easily.