I have asked this question before here. My answer now, as it was then, is this: I dunno.
But Michael Gasser, Indiana University Associate Professor of Computer Science and Cognitive Science, thinks he does so he wrote this freely available book: "how language works".
I like free books, but I haven't read it yet (I just got myself deep into Kundera's Laughable Loves. I've always been a sucker for Kundera).
I like Gasser's background. His work has focused on "computational models of human language acquisition and language behavior." Cool stuff. His recent work involves finding ways to use technology to help gather training data for statistical machine translation and then to integrate symbolic knowledge of grammar rules with statistical knowledge of training data. Cool boots.