With two and three word sentences your toddler will be surprisingly good at recounting stories. If you toddler can sign and speak, he’ll be even better. It’s really the raw amount of single words on a topic that will help your baby re-tell stories.
In most cases, the story will be disjointed and the words out of order, but even just one word can tell of a special event your toddler is recalling. My son was able to sign DOCTOR and BALL after the dentist gave him a quick check-up and would ask for his DOCTOR BALL when it went out of sight. When my son was about a year and a half old he told me he was SCARED of LIONS. Later I learned he was scared of TRUCKS despite loving to watch them on the Internet. But in person, they were loud and big, I guess, so he’d always say BYE BYE and wave in person. To wit I taught him SAFE and would tell him this over and over again showing him that his DAD would protect him by hugging him close.
While walking around the block, my son could talk about the ramp he went down in the park, just by saying “ramp.” Later we discovered a big foot ramp across the river so he would say BIG and “ramp.” I knew what he was talking about.
At one point in time we really lost track of how many words he was saying. This was just shy of his second anniversary. Thankfully my wife kept pretty good track in his journal, but seeing as how he had about 200 signs down pat, he likely had about the same in spoken form. This gave him the ability to talk about just about anything as it turns out.
Language development is such a wonderful thing to watch. As odd as it sounds I watch my boy grow like an unstoppable machine. No matter what happens, he just continues to grow and develop with or without any active input. I think that’s absolutely amazing.