Reading aloud to children aids in the process of language development because the primary way in which we build the amount of language that is required to speak and comprehend is by listening. It is no different than learning a second language; first language learning occurs in the same manner: through repetition, by replicating and mimicking intonation, and by adding more and more words to everyday vocabulary. Regardless of which theory you stand by, whether nativist (language develops from within) or empiricist (language is acquired through interaction), the main denominator of both is that there has to be exposure to language for it to expand.
According to Lev Vygotsky, this is part of the theory of constructivism, or scaffolding. Whether human language is an acquired or a naturally-occurring tool, scaffolding is essential to develop language skills. Communication is key to create the skills that help us to make choices, think critically, and problem-solve. This would be the empricicist approach to learning. Other theorists such as Jean Piaget would argue that language development goes hand in hand with cognitive development. This is not too far fetched from the theory of constructivism since cognitive ability has always been linked to language ability.
Therefore, reading aloud is no different than communicating. the difference is that the language spoken through reading aloud is scripted and limited whereas communicative language is varied, instantaneous, and creative. Nevertheless, it is exposure that provides the listener with the sound connections that are needed to expand vocabulary usage.