This is why picture books are so important for improving listening comprehension for young children. It gives them something to focus on so that hearing words they don’t understand or new grammatical constructions is less distracting, it provides visual cues related to some of those words and helps guide understanding of the story, and it gives the children and whoever is reading to them something to point at in discussion. It also makes the stories more appealing and makes repeat readings more rewarding.

I would guess (based on not-too-rigorous anecdotal experience) that the optimal level of word familiarity for most rapidly improving listening comprehension when read-to 1:1 is closer to 90% than 98% (but with the caveat that books should be re-read several times). The big difference is that having someone to talk to makes it very quick and easy to ask what words mean and discuss other aspects of the story.

When read to for an average of 1+ hour per day, young children improve at listening comprehension very quickly.