These are books that my kids, and crucially, I, like. They are beautiful and great. Either funny or wise or strange or contain a unique little world or all of the above, and they are well-crafted and made for kids. By made for kids I mean the creators have taken something they care about and shared it with kids in a personal way. As opposed to say making some simplistic formulaic junk about the power of friendship or going to sleep because they think kids are morons, or making a lovingly designed wistful book for emotionally stunted grownups in the guise of a kids book.
First tier:
Frog and Toad by Arnold Lobel
Mouse Tales by Arnold Lobel
George and Martha by James Marshall
Umbra by Jordan Speer
Burglar Bill by Janet and Allan Ahlberg
Each Peach Pear Plum by Janet and Allan Ahlberg
Peepo by Janet and Allan Ahlberg
Ox-Cart Man by Donald Hall and Barbara Cooney
Little Mouse Helps Out by Riika Jantti
Second tier:
Little Bear by Else Holmelund Minarik and Maurice Sendak
The Rainbow Goblins by Ul de Rico
Pancakes for Findus by Sven Nordquist
Need a House? Call Ms. Mouse by George Mendoza and Doris Susan Smith
Cars and Trucks and Things That Go by Richard Scarry
The Story of the Root Children by Sibylle von Olfers
The Tomten by Astrid Lindgren
Brambly Hedge by Jill Barklem
The Little Island by Margaret Wise Brown and Leonard Weisgard
Zoom by Istvan Banyai