Singing to children from tiny babies through to the first year of school in particular is a really important way of starting to develop your child's speech. Babies love it most if their parent sings to them (and no, you don't have to be any good!) and from early on it draws your child's attention to the sounds you make. By repeating those sounds to the same rhythm and tone in a song your child will begin to understand these are more then random noises and they have some sort of meaning more ...
Action songs are brilliant as your child starts to gain control of their own movements and sounds. Singing songs whilst doing the same actions or activities helps attach that word to an action. Head, shoulders, knees and toes is a song that will give your child early recognition of parts of the body. Jumping songs are often accompanied by the word jump as well. Now they can start to communicate with you without knowing all the words because they understand that actions have meaning, too.
As children grow in their knowledge of speech so they can now start to join in with you singing and doing the actions. It's great to do something together (particularly whilst waiting in the line for the checkout!) and you are helping them develop their memory. Number songs, colour songs, songs to walk to the shops, songs to wash to and crazy action songs all add to their knowledge. Their body coordination is improving, they are right!