He put before them another parable: ‘The kingdom of heaven is like a mustard seed that someone took and sowed in his field; 32it is the smallest of all the seeds, but when it has grown it is the greatest of shrubs and becomes a tree, so that the birds of the air come and make nests in its branches.’ He told them another parable: ‘The kingdom of heaven is like yeast that a woman took and mixed in with three measures of flour until all of it was leavened.’
Translation: Another parable he placed before them saying, 'The kingdom of heaven is like a grain of mustard that someone took and sowed in his field. It is the smallest of all the seeds of the field, the smallest certainly of all the seeds, but when it is grown it is greatest of all vegetables and becomes a tree so that the birds of the heavens come and live in its branches.' Another parable he spoke to them, 'The kingdom of heaven is like leaven which a woman took and mixed in with three gallons of flour until it was mixed whole.'"
Matthew's source for the parable of the mustard seed was Mark (4:30-32), though Matthew gets the "tree" part from Q. The parable of the leaven appears to come from Q--see the parallel in Luke 13:20-21. The gospel of Thomas also includes both parables. Similarly, Matthew 13: 44-52 appear to be Special Matthew, included also in Thomas.
The word for "parable" is parabole--literally, "thrown alongside." Parables are stories "thrown alongside" life, you might say, which prompt comparisons and contrasts between the story and life as we know it. Paul Tillich had his "method of correlation" which called for points of contact and comparison between the faith and the world. Parables do something like that.
Parable of the mustard seed: The parables of Jesus sometimes use hyperbole, as in the parable of the mustard seed. A mustard seed is small, but it is not the smallest of all the seeds.
In this story, the mustard seed first grows into a laxanon, which means either "garden herb" or "vegetable." Laxanon refers to a plant that was planted on purpose. Matthew adds that this vegetable grow into a "tree". (The tree does not appear in the original version of the story we have in Mark.)
Perhaps Matthew didn't think a garden vegetable was a grand enough comparison for the kingdom of heaven. More likely, Matthew is making a hyperlink to Daniel 4: 10-22, particularly verses 11-12, which use a tree as an image for the great kingdom of God which is visible to all and for all:
11The tree grew great and strong,
its top reached to heaven,
and it was visible to the ends of the whole earth.
12Its foliage was beautiful,
its fruit abundant,
and it provided food for all.
The animals of the field found shade under it,
the birds of the air nested in its branches,
and from it all living beings were fed.
Likewise, see Ezekial 17: 22-23 where the Lord God takes a sprig "from the lofty top of a cedar" and will plant it on the "mountain height of Israel" where it will produce fruit and become a "noble cedar":
Under it every kind of bird will live;
in the shade of its branches will nest
winged creatures of every kind.