Using Blocks to Develop Vocabulary
I usually print the words off with pictures to put up around the city or on the walls, that way your child will learn some word recognition too. If they remain involved you can have them write out the words to label different parts of the city. In my classroom I had many kids, particularly boys, who hated to write unless it was for the block area.
Note: Let your child dictate where the conversation goes. I know there have been times when I thought we were going to be talking about a city and it turned out aliens came and took us to outer space. Our playtime ended up being a great talk about spaceships, stars, and the different planets but never would have happened if I had been rigid in my instruction.