There are those people who would have you believe that your dog cannot comprehend the human languages. I don't agree.
Their understanding may not function quite the same as ours, but they are certainly capable of learning their own names, names for their toys, words for out, meals, ride, etc. The key is to use the same words consistently.
If I were dropped into a foreign country, it would not take me long to learn the words for certain things. Most people are capable of that. If you were shown by example what the words meant, you could learn to cope with that society.
I contend that the same holds true of dogs (and cats, although they are less likely to really care). If you say "out" to the dog and take him to the door consistently, why would he not learn what that word means? In fact, we had a dog once that quickly learned how to spell the word, too. We finally had to mis-spell the word to get it past her clever hearing and mind.
Many trainers will tell you that the dog learns commands because of the tone of voice used. There is something to that, but I would suggest that the dog is smarter than that. For instance, I can tell my dogs to "move" when they are in the way of my path, and they will get out of my way. I can even tell them in a variety of words--"move it," "get out of the way," "excuse me," and other terms. My dogs have learned that they all mean the same thing.
Where is the consistency, you ask? By using the same term frequently, and associating it with the other terms, they have learned a variety of commands that mean the same. Plus, I don't even have to use my command voice in those cases. Normal conversational tones will do. Why is this?
It may well be because I actually talk to my dogs. I talk to them as I would to most people and they have learned a great many things. They know the names of specific toys; they know to go looking for toys if I ask them where something is; they know that if I ask them if they're ready for "supper," (or, breakfast--I feed twice a day) that a meal is coming.
I can say things like, "go lie down," and they will. Mind you, they have been taught the term "down" as meaning lie down, but without putting it into a command tone, I still get pretty consistent results from the request.
They can even learn the differences between colors. Recent studies have shown the dog can actually see colors such as blue, green, and, I think it is, yellow. So, if you have a blue ball and a green one, the dog can differentiate between them simply by color even if they are the same size, texture and shape.
Now, I don't use "baby talk" with my dogs. "Does sweetums want (such and such)?" I suppose that if you did that all the time, it would work, but they are more likely to learn and respond to your normal conversational tones than such "sweet" talk.
Talking to your dog also expands the thought processes. A dog that is tied to the doghouse in the yard, does not have the "educational" level of the dog kept in the house. The outside dog will function more on developed instinct than trained impulses. They also tend to make-up their own rules out there and develop their territory that they will defend. Sometimes, even from their people.
So, the upshot is, keep the dog in the house and talk to him or her. You'll come to find that the dog's functional vocabulary expands over time. No, they cannot speak our language, so you'll have to learn some of theirs (looks, body-language, etc.) as well, but it's totally worth it to do so.
C. Rogers Upson has been training dogs and studying them for nearly 40 years. Her website is http://www.dogpotentials.com and she has two dog-related stores at http://www.cafepress.com/keepbts (Keeping to the Borders) and http://www.cafepress.com/dp52 (Dog Potentials).