With Toddlers
Play is an important part of the development of language. As soon as a little tyke has started to develop words, there's no reason parents can't participate in their child's play. Children are naturally interested in naming objects and concepts in order to communicate their thoughts and ideas with parents, and so it is with early free play - your only role may be defining real-world things in their pretend context. But there are plenty of ways you can encourage free play without impinging on your child's creativity.
Grown-up Life is Play: Present a toddler with a series of props from day to day life: a pan, a broom, a shovel, the TV remote, etc. Don't just select items for their familiarity - also choose items with bright colors. Then you can sit back and wait for your toddler to select an item to play with. You can talk about its color or words and numbers that might appear on the item, but most of all, give in to the instinct to play-act. Pantomiming actions you would perform with the object encourages your toddler to do the same. Then, for fun, experiment with using the item in ways it isn't meant to be used. Can a broom become a guitar? Can a banana be a phone to call the grandparents with? When you find your toddler playing with an item in an unexpected way, you can encourage him/her and play along.
Set the Stage for Play: For a hobbyist who is likely to have any number of fantasy elements around his/her home, this set up is similar to the one above only with objects a bit less useful in day-to-day life. Provide a toddler with stuffed dragons, sturdy plastic ray guns or maybe a small foam sword. This time, in addition to going over the names, colors and characteristics of the items presented, you can encourage your child to really step outside of reality and play pretend. A parent should let them wield that foam sword or the ray gun and - so long as they stay gentle - even let them play fight with it. (If you're concerned about exposing your child to weapons, there is a growing body of studies that suggest roughhousing and pretend fighting are ways children naturally relieve stress and are a part of the process of growing.)
