I think of books as means of communicating and learning from others' experiences- both for adults and children. But given that I have 2 young kids, I constantly think about books that they should read, and what they will gain from it.
I'm looking to compile a list of books I recommend for my own purposes. This by no means is exhaustive, so I'm happy to get suggestions.
Also note that there may be overlap in the books for age groups. I'm sharing from my personal experience.
18 months - 3 years
Press Here: what a fun book to play with little children
The Very Hungry Caterpillar: classic for young kids
Toddle waddle: great introduction to reading for little children
Brown Bear Brown Bear: Easy fun read that they will want to do over and over again.
3 - 5 years
The Tiny Seed: As kids are getting older, they develop an urgent need to be 'big' and this story very elegantly addresses that topic.
The Gruffalo: to show that even though you're small, you can be strong and fearsome.
The Giving Tree - Teaching kids to be thankful
Lydia Lou: Managing the fear of sleeping in their own bed.
Smartest Giant in Town - To be giving even in hard times.
Pinkalicious: Both my girls love it, because first they want everything pink, but over time they got the point of not over-doing it.
Paper Dolls: That permanence is not a realistic idea, and that loss is okay as long you enjoyed the present. And the fun of making their own paper dolls
Squash and Squeeze: How to appreciate what you already have.
How Rocket Learnt to Read: Inspiration to learn the alphabet, and read their first few words.
The Magic Paintbrush: how a paint brush and your imagination can win over kings.
Charlie Cook's Favourite Book: For the love of books
The Snail and the Whale: to know that there is much to discover in the world outside the one that we live in.
Where The Wild Things Are: Just about sparking their imagination
The Pets You Can Get: Understanding having pets- the fun and the responsibilities (and how they could be fun too)
5 years- 7 years
The Day The Crayons Quit and its 2nd part, The Day the Crayons Came Home: This is a hilarious book about how crayons rebel against a kid mistreating them, which is classic with kids around this age group. And how the kid brings them back together.
Bobby Knows Best: That parental advice should be heeded, a classic :)
Good Night Stories For Rebel Girls: to know about all the brave women, and all the different kinds of things you can grow up to be- from sportspersons, to spies, to scientists, to authors, to freedom fighters, to engineers.. the list goes on. Note: Its not just for little girls, but for boys too- to know that girls can do amazing things.
Charlie And The Chocolate Factory: The classic by Roald Dahl. Just thinking about all that chocolate and candy is enough to keep them engaged besides the core idea of never giving up and always doing the right thing, besides the idea of always aiming for excellence (in this case, for chocolate making)
Fantastic Mr Fox: With Roald Dahl books, they require parental guidance to walk them through the story and the language (there are some words which you normally wouldn't use around a 5 year old).
The Giraffe And Pelly And Me: Another amusing classic by Roald Dahl
The Enormous Crocodile- Last one by Roald Dahl that I recommend- partly for its humous and for kids to learn that there may be bullies, but so are there good people
Charlotte's Web: This is a slightly slow read, but its great for building their ability to work through a complex web of stories, all of which stand for compassion towards those around you.
I Dissent: Similar lines are Good Night Girls, but it introduces them to the deeper idea of standing for your ideals, and the concept of law.
Mistakes That Worked: to show that its important to experiment with purpose- who knows what might come of it.
Green Eggs and Ham: Part of the Dr Seuss series- while the language is simple, the concept is a bit grown up, so I found that post 5 years was best.
Amar Chitra Katha: I read the popular ones like Ramayan and others, but in many of these, I had to explain the concept of how gender equality was maintained.
Amma Tell Me About Diwali (and others in this series): Helps Indian children who grow in a western lifestyle connect more easily with their culture.
Art Play with SF MOMA: My kids enjoy art. This is hands down, probably THE best book on playing with art and learning new styles. [may be tricky to source, since I bought it in the SF MOMA store]
There were plenty books on science also: like animals and nature, and experiments- but there are plenty of those.
7 years plus. Currently experimenting with the following series:
Narnia
Wimpy Kid: they enjoy the humor of the book. Its an easy read, and introduces them to more self-reading.
Harry Potter