We have been very fortunate in that no one in our family has passed away in quite some time. There has been no need, and it seems this discussion is only conducted as needed, to go over what death is, what it means to die, and what the word dead is all about.
Naturally, I haven't the foggiest clue how I would answer any of these questions and really didn't think about my eventual answer...that is until my gal overhead older cousins taking about death as depicted in a Star Wards movie. Being the curious lass that she is, she wanted to know what it meant. I stumbled like a 13 year old caught with porn. I half started a couple sentences before my older brother stepped in to simply define for her death as when "your body stops working". She was fine with that and went along her merry way. Whoof, that was close. I almost had to come up with something on the fly that could have shaped her fears/imagination/etc about the topic of sickness/death for some time.
Seems then that toddlers don't need a lot of details, not all the time anyway. A short easy to transferable definition - something that has stopped working (batteries dying in a toy, etc) - satisfies their need to know and lets us grown ups off the hook, at least for a few more years, of sharing any of the nasty bits.