I drew some chalk targets on our gate for him to spray off. I put some letters he knew, some he didn't know, and some shapes so the two year old could play too.
I'd tell him a shape or letter to squirt at and he'd squirt it until he'd washed it off.
And if you're looking for a great book about chalk, I highly recommend Chalk by Bill Thomson. It's a wordless picture book with beautiful mixed media illustrations showing three friends in the park on a rainy day. They find a bag of chalk and the first friend draws a sun. The sun comes out! The second friend draws some butterflies and the butterflies magically appear. The third friend draws a dinosaur and it, too, comes to life! Unfortunately. the dinosaur is big and scary and wants to chase them so they come up with a very clever solution.
There are so many fun ways to use chalk! Got a great post about it? Please link it up and check out all the other ways these creative people have used chalk!