I agree with Carrie. I think it has a lot to do with his age and personality. I would also say do not push your son to be more social. Let him come around on his own, either he will or he won't. Maybe he will take after you. Shyness isn't bad... when considering the spectrum of what is/isn't "bad," really, it could be worse. Try modeling social behaviors for him. Invite a play group over, or go to story hour at the library. Let him see you interacting with the other mothers. Also, when I am with my daughter and another mother/child I always make sure to great/talk to the child so my daughter sees me interacting with someone of her age, not just the adults. Maybe he will think "I can do that too," and that it's easy. Get down on the floor with the other children, your son will come join you. Most parents sit on the sidelines and watch a group of children interact. Get down and roll around with them, or at least sit at their level with them and observe. My daughter always gets down and sits on my lap until she is more comfortable. Other children even come over and sit on my lap... strangers. The parents say "oh, I'm sorry." They hand me a book and I read it to them, just like my child does. I say "thats okay, I'm used to it (kids climbing on me.)" When my daughter starts to interact and play with the other children I back off and watch. Getting back to not pushing him... We want our children to be social, and we don't want to go around making excuses for their behavior "oh, he's just being shy." I just hate when a parent says that to me about their child. I say to them "Thats okay, you don't have to talk/play with me." My daughter doesn't notice the shyness, and I bet the other children at your sons daycare don't either. You are pushing your need for social behavior onto him. Pushing him by saying things like "why don't you say hi to so-and-so," or "just go over and play with..." He has no need to be social, you have that need for him. You said it yourself that he was "parallel playing." What's wrong with that? He is playing and active. He is entertaining himself and self-quieting (able to be alone, no need for someone to entertain him. I think this can lead to a great imagination.) At 2, I don't think he feels left out. I also think that his observation of the other children is a good quality. If he likes to just sit back and watch... a lot of people are "people watchers" and enjoy sitting and watching passers by. My daughter, 15 months, loves restaurants and watching all the people in them. We took her to a basketball game, she watched everyone around us... quietly. She just really likes to watch people. She is very observant. People, places, anything new, shiny, ect. I don't think shyness is something to fret about. I guess I don't see shyness as awkward as you, maybe. I think everyone has times and circumstances in which they are shy, wishing they could disappear into the wall. Assertiveness is something that comes with maturity and confidence in oneself. You have to model the behavior for him, he will catch on in his own time. At the same time it will help you to become less shy b/c you will know that he is watching. If he is still shy, so what. Don't you have bigger fish to fry? Is he generous, caring, honest? Isn't that what's important?
Great answer from Ruth as well...