There can be few books for children that work on so many levels, and are so completely satisfying. I have been a children's librarian for over 30 years, and I can't think of anything to surpass it. The very simple story is just that the caterpillar eats his way through a variety of foods, becoming bigger all the time, until he turnes into a butterfly. The artwork is glorious, in Eric Carle's typical tissue-paper collage, with wonderful jewel-like colours. He has made many picture books, but this one is definitely the best. The pages vary in size, getting gradually larger with the caterpillar, and have holes in to show him chomping his way through the leaves, fruit, chocolate cake and ice cream, so it is interesting and tactile for little ones. It introduces counting (because he eats one plum, two oranges, three pieces of melon, etc), days of the week (one foodstuff per day!) and thus the passage of time, growth and change, the biology of caterpillars and butterflies, and, above all, it's great FUN!! My all-time favourite children's book is "Where the wild things are", but this would run it a close second.
There is no better book for under 7's. Buy it NOW, but buy the proper book, as opposed to the board book, or any other "messed-about version!