In fact it need not be a book all the time either. It could just be you talking about what you see around you as you take the little one for an evening walk. Its the playful verbal interactions which is important in this age.
A toddler’s attention span is short. So whatever story you choose, make sure you keep it not only simple but short as well.
when it comes to short stories for kids, tell them tales about things they know. Again, pictures work very well with them. For example; if they are learning about farm animals then choose books on this topic. Or you could try touch and feel books. For example those that come with pictures under flaps or has characters wearing clothes made of different materials.
For new topics, introduce toddlers to various concepts like colour, shapes, numbers etc through books to read online or printed stories. It will build their vocabulary and knowledge of things around them. Books that introduce ideas like up-down, big-little etc. through lovable characters interest this age group.