Due to the fact that babies at 12 months are slowly but consistently learning to understand language, you should continue talking to your baby constantly. Introduce new words with clear pictures and objects to show what they mean. Repeat words to reinforce them. Whenever your baby talks let your face show that you are clearly listening to encourage the dialogue.
Read to your child every day from books that have large colorful pictures. Engage your child as you read, and point to pictures and say what something is called so that your child can make a definite association.
Peek-a-boo is still a great game for your child at this age. However, you can give it variety by hiding under a blanket or table, or behind a corner to test if your child will be able to find you. Teach your child to hide her face behind her hands so that you can find her. Also, you can play hide and seek with objects to gauge your child's understanding of object permanence. Hiding a toy at first partly, and then completely under blanket is a great stimulus for your child.
"Action songs" are songs that have accompanying hand gestures to the words of the music. Famous "action songs" for kids are "The Itsy-Bitsy Spider," "Pat a Cake" and "This Little Piggy." These songs are great to teach and to sing together at this age as children learn and practice vocabulary as well as hand coordination.