I think it's important to be honest, in an age-appropriate way!! DD1 is 3 and she knows that babies are made by mummy and daddy (or, in the case of some mums and dads and/or families with same-sex parents, babies are made with some help from special doctors and very special people who donate the 'bits' that make the babies... complicated for a 3yo but she 'gets it' in at least *some* sense), the baby grows in mummy's tummy and in most cases, comes out through mummy's vagina or if the baby can't come through there, the doctors will make a big cut in mummy's belly and pull the baby out through there.
I don't think it's ever too early to start talking about it, I personally don't believe in 'the talk', I think it should be that children get age-appropriate information that is as accurate as possible whenever they ask questions, so that by the time they reach puberty, they know the whole story and are comfortable with it, itms. It can be awkward, but just remember, he doesn't know what sex is so can't be grossed out by it yet lol Get in now while it's a confusing novelty and he'll have made sense of it before it becomes 'weird' to talk about!
I think explaining the actual sex act to small kids needs to be pretty honest... just imagine if you gave him the 'cuddle' explanation and then he hugged a friend and said, 'And now we've had sex!' lol!! My DDs occasionally shower with Dad so they've seen all his bits and DD1 knows that it's useful for peeing and that it somehow aids in making babies, she doesn't have the whole story yet but she is satisfied with that knowledge for now.

Good luck with it It's a tricky subject!! I know however you go about it, it'll be the right way for your little dude to wrap his head around a very complicated topic Best of luck with #3, hope it's a very happy and healthy pregnancy!