We do a lot of this.

This is the boys (and my) favorite book. It is Richard Scary's The Best Word Book Ever. 

It has the greatest pictures for asking questions and explaining things. Once the boys have hit around 18 months they start recognizing things inside and outside the book that are the same (ie. That's a chair in the book and right across the room is a chair). They have both enjoyed it before that age, but it is even more fun when they are interacting with the pictures. I remember loving this book at a child. I am glad that I still do and that my boys love it too. I can't say enough good things about it. 

Note: I don't know if there is an updated version. We have the 1963 version. I love it. I wouldn't want to see an updated version. Who wants to look at pictures of people staring at a tv or computer or phone? Boring. I like the old fashion playground and tools. Most everything else is up-to-date.