L. Frank Baum never really said much about the language of Oz. He uses the narrative convenience of people in a magical fairyland speaking the same way as American visitors, but he doesn't go into much detail about it. At one point in Dorothy and the Wizard in Oz, however, Ozma mentions that the word Oz "means in our language 'Great and Good.'" So what language is this? Well, Ruth Plumly Thompson states in The Royal Book of Oz that the language of Oz is known as Ozish (spelled "Ozzish" in some later books), and is exactly the same as English. "Oz" meaning "great and good" certainly doesn't sound like English, though. Could this be an indication that Ozish is really a separate language, but Americans hear it as English? I've seen that suggested, but I don't really like it. Besides, wouldn't Americans then hear "Land of Oz" as "Land of the Good"? Well, maybe not. English speakers don't call Argentina the "Land of Silver." But since no Americans have any problems reading signs and letters written by Ozites, it seems like the translation magic would also have to affect written communication. Maybe the Babel Fish could handle that, but I don't know that anything we've seen in the Oz books could. So my preferred way of thinking is that Ozish started out as a totally different language from English, but was eventually replaced with English. We aren't told that much about Old Ozish, but the McGraws give us "nuffet," meaning "mid-morning." And in the non-canonical Queen Ann in Oz, Karyl Carlson and Eric Gjovaag claim that a "jemkiph" (the middle name of the former King of Oogaboo) is a date book. There's one poster on my Oz mailing lists who worked out some possible Old Ozish terms, based largely on proper names (for instance, he translated "Tattypoo" as literally meaning "Witch-Queen of the North"). And another one claims that Old Ozish is based on Gaelic. I suppose just about anything is possible, when the original authors told us very little.
I'll probably get a little more deeply into Ozian animal speech next week, but I think it's clear that they actually learn to speak upon reaching Oz (or sometimes its surrounding lands), rather than simply having their animal-talk magically translated. Hank the Mule comments on being able to talk "as Betsy does" at the end of Tik-Tok of Oz, while Toto prefers to use dog language even after it's revealed he doesn't have to. But would, say, a bull from Pamplona that somehow found its way into Oz gain the ability to speak English/Modern Ozish, or would he start speaking Spanish?