N.,
My two youngest sons have gone through the same thing. My middle son now 6 I was told had speech delay, well that wasn't the case at all. It was merely a case of "I will talk when I am ready". As in your sons case he understood everything I told him, he was 2. Well at 3 when he was still not talking full sentences the pediatrician sent us to speech therapy, it helped a little, not much. I ended up pulling him out and putting him in daycare for pre-k. Shortly there after he started talking. He heard all the other kids talking and decided it was time for him to start talking. Now I cannot get him to be quiet.
Now for my 3 year old, he still isn't speaking full sentences. However, if you say something he can repeat it. He is mocking bird. When I speak to my pediatrician about this, his response is that he will start talking when he ready. As long as he can repeat and mimic things he is fine, he is just lazy. Which is the case. And I trust my pediatrian 150%.
Now in the case of my oldest son who will be 14 in a couple of weeks he is a bit of a prodigy when it comes to talking. He was talking full blown conversations a 9 months. I could talk to him as though I were talking to another adult in the room almost.
So as you can see, every child is different and learns at their own pace.
Hope some of this helps.
S.
35 y/o SAHM of 3 boys
13, 6 and 3