It's amazing -- in the first three years of life children learn how to speak a new language, but how do they do it? As a parent, you are his main source of learning, and the experiences you provide him with and the language you expose him to will play a crucial role in his ability to climb this huge mountain.
You will have a massive influence on your child's language development. From the moment she was born, she has been a captive audience, taking in your every word before she could even understand what they meant. The more you speak to her, the more opportunities she will have to learn the language. The way you speak to her will also have an impact on her own language skills. "Parentese" is when you speak in a more basic vocabulary, using exaggerated expression, which helps babies understand and learn speech. Nursery rhymes and children's songs provide another language lesson, with the help of repetition and rhythm.
It's pretty cute when you see two infants or toddlers babbling away to each other, but this interaction actually has a purpose in helping him develop his communication skills. The "conversations" may not make a lot of sense to begin with, but he is practicing the social skills that will allow him to chat with his peers as he gets older. Exposing him to social situations will also allow him to watch and learn from adults and possibly older children talking to each other.
Different sights, smells and sounds will stimulate your child's senses and help her to learn new words. You can use a variety of different experiences to add to her language development. In the park you can introduce her to a "dog" or "tree," while in the grocery store she may get excited about seeing "bananas." All these activities outside of the home will reinforce words she is learning and introduce her to new ones.
Reading "War and Peace" is unlikely to help your child's language development, but age-appropriate picture books are a useful tool. To begin with, you may just look at simple pictures together and identify familiar objects. As he gets older, he may enjoy listening to short stories, or even telling you the story from memory or by using the pictures. As he develops favorite books, the language will become more and more familiar to him, even if it starts to bore you!