3 months:
Child responds to sounds and seems to recognize your voice.
Cries differently for different needs.
Smiles when he or she sees you.

By 8 months: 
Listens when spoken to. 
Recognizes words for common items like "blanket" or "juice."
Uses long chains of babbled sounds.
Imitates speech sounds and "sings" along to music.

By 12 Months: 
Understands 50 words.
Begins to respond to simple commands like "Come here."
Says first words, like "bye bye," "dada."

By 18 Months:
Nods and shakes head to some questions.
Says 10 names for common objects and familiar people, like "mommy" and "ball."
Says more words every month.

By 2 years:
Understands 500 900 words.
Uses speech that is 75 percent understandable to familiar listeners, although many speech "errors" can be heard.
Combines two and three words, as in "more milk" and "mommy bye bye."

By 3 years:
Understands differences in meaning, as in "go stop," "big little," "clean dirty," etc.
Produces speech that is 90 percent understandable.
Uses three to five word sentences.
Usually talks easily without repeating words or syllables.

By 4 years:
Uses many more words than you can count.
Produces speech that is understood by all.
Asks "how," "where," "when" and "why" questions.
Uses compound sentences combined by "and," "but," "so" and "because."

By 5 years:
Says most sounds correctly except perhaps a few like th and r.
Tells stories that stick to topic.
Uses the same grammar as the rest of the family and can use complex verbs like "could have been."

By 6 7 years:
Speech is error free and adult like.
Seldom makes grammatical errors.