My baby is 3 months old and likes to babble a lot - when I speak to her she seems to be having her a conversation with me. Are we actually talking? Does she understand anything I am saying?

She loves your voice and enjoying the way your expression, tone and pitch. My boy just turned 3 months... i can totally relate it. He will also babble sounds and give a loud scream when he is excited. You can read and sing to her, teach her simple sign language by grabbing her hands to do words such as Milk, Please, Thank You, More, Mother, Father, etc. These will help her to sign back her request in time to come. Enjoy!