My 2 year old grandson is in a progressive day care that says he needs to ask more questions, like the standard who, what, where questions. He says 3 and 4 word sentences and is excellent at repeating words that adults say. How can I help his parents with his learning?

Small things could help your grandson, including;
Talking a lot yourself around him, explaining your actions, for example, 'I am walking' etc. He may pick up new words as children tend to listen to adults and learn words through listening.
You could do an activity with him with flash cards, where you say an objects name and ask him to repeat it.
Also asking him lots of questions could help as it will help to teach him that it is okay to ask questions, etc.

At two years old, he is going to understand a great many more words then what he will be able to express verbally. Children at this age learn best through play and just interacting with those around them in day to day conversation... talking about what is around them, what they are doing, "reading" books together, etc..
From an educational standpoint, he doesn't "need" to be doing anything in a formal setting. He sounds like he is doing very well for where he would be expected to be in terms of his use of vocabulary.

I wouldn't worry about it too much. If he's speaking in 3-4 word sentences, he's doing very well for his age and is right about on average for what's expected at 2 years old.

Like harryanne said, they could ask him questions to model question-asking, but they shouldn't overdo it. It will come in time though -- they shouldn't worry at all!

We expect way too much of our children like not letting them be children. At age 2, a child BEGINS developing the ability for long term memory storage, but not conceptual thinking. That ability doesn't begin developing until puberty. Also, with the increasing average life span, nearly double in less than 100 years, there's an offset on the other end of life. Remember the Bible talking about a child of 100 years of age playing on the hole of the Viper snake?

Let him be a child. Far too soon you will miss this time. Despite all the supposed claims made by these so called "progressive day care" centers, I've yet to see a list of successful individuals who can actually say this is how they got their start.

Parenthood by Proxy: Don't Have Them if You Won't Raise Them