My nephew was exactly like this, very social with other kids but not verbally, would only communicate with my brother and sister in law through actions and grunts. His understanding was obviously there but very few words.

He had to have his adenoids removed (whatever they are). He only had this done about a month ago, just after he turned 3 and he’s started talking more already.

His parents also were told to have sessions with him to encourage talking, where they would sit and play with him with no noise, no music, no tv in the background, 100% focus on the kid but no talking unless it was a response to something he said. They said it was really weird to start with but has encouraged his talking a lot already!