Does Olivia Understand?

Since I began to get a belly, We have talked with Olivia about where the baby is. If you would ask her she would pick up my shirt and point to my belly, maybe even give it kisses. She would also refer to born babies as babies. So we knew she could use the word in both instances but we never really knew if she understood or not. Today when she came to see Nora for the second time, we asked her “where’s mommies baby?” I really thought she would lift up my gown and point at my belly, but instead she pointed at nora. Also today when she was reading books with the babysitter, they were asking her to find herself in pictures and she would point to a small child. Then the babysitter asked Olivia to find Nora in the pictures and she pointed to the smallest child. Do you think she understands? We think she does and we are continually amazed at how much she understands.