I read daily to my 2 year old but I don't think he understands what is going on in the books. I think he doesn't get that there is a story and sees each pages differently rather than a continuous story. I ask him lots of questions about the book as we read and it just seems like a hit or miss and sometimes he just pauses for long periods just saying 'mmmmm'. I'm just hoping one day he could pick it up.
He can remember parts of a story but I'm not sure how much he really understands. He definitely can't retell a story although some of friends say their kids can!
Not sure if it's an age thing. He loves it when I read but only in bed otherwise he wanders off! Also doesn't have much interest in playing properly with toys - everything we do lasts for a couple of minutes before he gets bored.