As a departure from the nice philosophical nodes above (most of which I like), I will combine two things that have already been mentioned:
1. Read to your kids.
2. Talk to them and ask their opinions.
An anthropological study was recently done on the different ways in which parents teach their kids to read. Among one group, the parents only occasionally read to their children. They did not talk to their kids much, and never bothered to help them learn their language. Obviously, this didn't do much for the kids.
Among another group, the parents would sit down and read to the children starting as early as 6 months. However, the parents were expecting too much out of the child's attention span: when the child's attention wandered, the parents kept trying to bring the child back to the book rather than start a conversation with the child about what they were doing / interested in. Mistake #2: The parents made no effort to connect pictures and words in books with real-world things; the parents also never asked the child's opinion on anything. This made it difficult for the child to take things in the book out of their context and consider them in a different one. Third mistake: the parents discouraged questions once the children got old enough to ask them: the parents would urge their children to sit and listen quietly.
These actions had a devastating effect on the child's ability to take something out of its origional context and evaluate it in a different context. It almost completely destroyed the child's ability to formulate opinions for themselves on something they had read. When asked about a character in a story, "what would you do if you were Billy?" these kids only respond with shrugs. They have no idea how to even begin thinking about this question.
The really sucky thing is, once a child gets to this point by age 3, this conditioning is irreversible. These kids are doomed for life to be second-rate scholars because they have no critical thinking skills.
So, what can you do?
- Start reading to your child as early as 6 months. Use books with pictures. Don't worry about alphabet books - they really don't help your child under age 3 or 4 with anything; it's like trying to get your kid to know the alphabet by rote memorization, and that's not going to do them a bit of good. They teach the alphabet in kindergarten anyways, and by then, your child will have seen so many letters and words that they should pick up on it fairly quickly.
- Whatever your child is interested in, talk to them about it. Engage in conversation. Even if it's not the book you were trying to read to them; if you can, draw parallels between your child's current interest and the book. Their attention span will be really short at first, and their "conversation" may seem limited to you - but remember, they learn by exposure.
- Make sure you help the child make connections between the objects and words in books and rl objects. If you have recently read to your child about a duck, point out the ducks to your child the next time you see some, and make sure they remember reading about them.
- Ask your child questions ranging from "what color is that?" to "do you like the whatever?" to "what do you think about XYZ?" to "what would this animal do if it were in a forest instead of the mountains?" At first, intersperse these questions throughout a reading. As your child gets older, around 3, they will be able to listen to a sizable chunck of story - and remember enough about it that you can save most of the conversation Q&A until the end. This further stretches their mental capacity.
The methods described above were found, in a third group, to be highly effective in encouraging the language development of kids; they turned into what we think of "normal" scholarly students - the kind that goes to college.
I can dig out the text in which this study is found and cite it, if desired.