Children comprehend language more than they are able to express. They usually understand the story completely but they cannot retell the same story in its entirety. They need to experience language via different types of literature. They must also gain more language principles, such as concept of print, to help them make sense of written language, learning how letters combine to form words and how words combine to form sentences. Thus, children are able to increase their vocabularies and develop comprehension skills.
Language is a foundation of literature.
If you think of literature as a vase then all of the cut flowers in this vase are the language with which authors create beautiful books for children. Children grow up to appreciate the language and become literate. Adults should insure that their children's' lives are filled with vases of flowers to raise a literate child. However, a child who lives in an environment devoid of these vases may grow up alliterate. The child may know how to read but may show no desire to spend time reading.