How does language relate to thought? Thinking is the ability to process things. The reason language is highly correlated with it is because language is a form of abstraction which can be processed (Played around with). But language is not the only thing we can process, we can also process things like pictures, sounds, actions and other things. The process can be correlating things, transforming things and many others.
Thinking is the movement in the mind, transformation of perception, decision making, and the most effective medium in which we can achieve these is language. Though thinking with language alone can cause problems, one can sometimes confuse one's abstract ideas to be more then just representations of things.
Thinking is also how we generate new schemas, This is why imagination is a form of thinking. Seeing shapes in clouds, stories in music. A useful description of imagination can be "Free movement through associations". As I said before thinking is movement, and imagination is a less restrictive form of it.