I think role playing is a good building block for kids. This games creates an opportunity for kids to explore their imaginations and creativities. They can come out with any sort of stories during this role play activities. My daughter loves to do role play as well and usually I become her loyal customer who come to see her theatrical performance.
Do you remember the movie Toys Story! It is exactly the same! Role playing!
Based on my observation there are many benefits of doing the role playing.
1. the kid can memorize the story line from their favorite story books. They can pick and choose which toys to represent the character on the story of their choice. When they do this character assignment, they actually match the character on the story with their toys. If you observe carefully you can see how well they can understand and absorb NOT only the STORY line but the character as well.
2. the kid can be so creative when come of making up their own story line. The story line can be very absurd which only they can understand it. But if you carefully observing it and listen carefully on how they communicate or the words chosen during the story, you will see a message within the lines. Usually it is the best way for them to express their feeling, fear or expectation. Just observe and try to connect the story with their day-to-day life.
3. the kid also learn how to organize, plan and execute the plan. When they do role playing they need to organize their steps. What they need to do first, for example preparing the stage area, choosing the characters, organize the story line and perform it. If you notice, all this will help them how to organize their thought process as well as organizing her team one day. This is a building steps of learning something bigger.
4. the best time for bonding. If you play with them, this is the best time for both of you to build up the bond. They know that you are very enthusiast to spend your time and sit down with them to play together. They also learn to be leader here, when they give you instruction and you follow their order. You can practice their skill on giving out order in proper way. You can give them suggestion and train them to appreciate other people opinions. You can also ask them for clarity so they learn how to organize their words when giving out instruction.
Trust me! there are many more benefits from this simple play. Probably you will find more than what I can list down here.
Happy Playing !