HI Deb,
An I spy quilt is a quilt made of fabrics which feature pictures of various objects: a boat, cherries, spool of thread, dog, cat, raccoon, star, Christmas sock whatever. Sometimes the pieces are "fussy cut" so that the object fits within the confines of the piece.
The "game" is to say to the child "I spy [fill in name of the object found somewhere on the quilt]" The child then searches the quilt to find the piece with the picture of the right object. Two and three year olds really like to do this. Once the children get a little older, they like to explore the quilt on their own to see the many kinds of objects that are included.
I think it would be a good idea to have an I SPY quilt that encourages the child to learn the names of the objects in another language "Como se dice in Espanol?" "What do you call it in Spanish" for example.