Well, to explain the concept of rain to a toddler, you obviously cannot go by the scientific definition, but need to create a story out of the element - cloud.
This is how I go, There is sky above the ground, blue in colour and there are lots and lots of clouds in the sky. All these clouds have some water(moisture in essence) and there comes a point where the clouds feel the water in them is very heavy to carry. They say, 'Oh! it's heavy', 'Oh! it's heavy' and drop all the water down that pours as rain. Here the rhyme goes, 'Rain rain go away'.
I really carry the essence of this story in my facial expression and my toddler is all ears when listening to me. I also, talk about the umbrella saying, we need to hold it on top us to avoid getting wet. And, she screams ' U for Umbrella'.