The two-word stage is a crucial phase in language development where children begin to combine two words to form simple sentences, typically occurring between 18 to 24 months of age. This stage marks a significant leap in cognitive and linguistic abilities, allowing toddlers to express basic ideas and relationships, such as requesting objects or describing actions. The emergence of the two-word stage indicates that children are starting to grasp the rules of syntax and the meanings of words, laying the groundwork for more complex language skills.