Providing a rich broth for your child's simmering "alphabet soup" of verbal abilities is often as simple as focusing on what she's interested in. A tiny nature lover might rush to the garden yelling, "Look, Mommy -- flowers!" Use this opportunity by responding, "Yes, the pretty yellow flower is a marigold, and the red flower is a rose. Here's a tulip."
What you should try to avoid is foisting too much knowledge on your little one or using concepts that are beyond her comprehension. Likewise, simply responding with a "yes" or a "hmmm" (as is often easier) won't add very much to your child's knowledge or encourage her curiosity.
Show your child that you are indeed listening to -- and responding to -- her attempts to communicate. Don't jump to correct her when she misspeaks. If she says, "That witch was the baddest of all," you might agree and repeat the thought correctly: "Yes, that witch was the worst one in the puppet show. She was really bad."