What better way to teach babies and toddlers where each body part is than with a game and a book? Karen Katz has created one of the most interactive and teachable peek-a-boo type of stories that will help you as you and baby have fun learning. It is one of the best children’s books. Finding the belly button, the eyes, and other parts of baby’s anatomy will be exciting and fun as you make a story into a game. Interacting with the baby and the story will be one of the easiest ways to teach simple concepts. Play time, nap time, any time, this story will keep you and baby having fun for a long time

This bright, bold, biology book of sorts has entertained and educated kids and parents for decades. Maybe it’s the array of images of animals and people going about their business (pun intended) that delights. Or maybe it’s the unapologetic honesty of the text that readers find refreshing and fun. Whatever the case, this classic that brings new meaning to the term “potty humor” belongs in every young library!
For my needs I recently created - Best Popular Picture Books on Goodreads with pretty limited criteria - that is 5000 ratings and shelved at least 500 times as "picture book". Sure it won't be as long as this list - and if people ever start voting on it, I'll probably end up doing a lot of deletion. But it will always be a good starting place for picture books. 

A talented seamstress makes beautiful quilts for the poor and the homeless When the king who has everything decides he must have one of her creations, she tells him he must give away everything; then she will give him a quilt. In the process of shedding his many possessions, the king finds true happiness. No summary can do justice to the mesmerizing, fairy-tale quality of this beautiful tale.

The most fun types of children’s books, are those with story lines that will help you participate. This is one of those types of stories. It is interactive enough to give the reader a voice of his own and even allow you to take part in being one of the characters. A little mouse has found a yummy, ripe, red, strawberry, and he is not willing to part with it. You, the reader, take on the voice of the bear and try to get the mouse to hand over the strawberry. Fun and exciting, getting into this story is easy and will keep you coming back for more.
The German children's books Struwwelpeter (literally "Shaggy-Peter") from 1845 by Heinrich Hoffmann, and Max and Moritz from 1865 by Wilhelm Busch, were among the earliest examples of modern picturebook design. Collections of Fairy tales from early nineteenth century, like those by the Brothers Grimm or Hans Christian Andersen were sparsely illustrated, but beginning in the middle of the century, collections were published with images by illustrators like Gustave Doré, Fedor Flinzer, George Cruikshank,[6] Vilhelm Pedersen, Ivan Bilibin and John Bauer. Andrew Lang's twelve Fairy Books published between 1889 and 1910 were illustrated by among others Henry J. Ford and Lancelot Speed. Lewis Carroll's Alice's Adventures in Wonderland, illustrated by John Tenniel in 1866 was one of the first highly successful entertainment books for children.
Cal and his best friend, the tactless but loyal Soy, learn that the frog (who prefers the name Deli) has sought them out for a reason. When a school administrator named Ream reveals himself to be a dragon, the boys discover that fairytales are real, and that there is magic afoot in Stagwood. With Ream on their tail, the trio must unearth a powerful tool protected by riddles and rile (the magic that fuels nightmares) to save the fate of all fairytales past. Their only means on conveyance, Cal's now-flying bed, takes them on a journey beyond the home of the fairies (a cloud floating somewhere over Iceland) to set things right. But, before Cal can defeat Ream and his kidnapped army of fairies, he has to deal with Soy's knack for arguing with magical creatures, discover the truth about Deli's identity, and earn his place as the hero of the story. 
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