They know if their parents each speak a different language. In our house, I speak to my son in my language, and my wife speaks in hers. Our son understands both and replies to us in our language. However we do tend to mish-mash the two languages when its convenient, since some words or phrases are easier to say in one language or the other.
But if both parents spoke two languages simultaneously, the two languages might be indistinguishable for a young child.
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