You might be interested in a fascinating book about the science of the reading brain. It's called Proust and the Squid by Maryanne Wolf and pulls together a lot of current research in neuroscience to attempt to explain what happens when a brain learns to read.

It seems that although we are born hard-wired for speaking, our brains 'must develop all the perceptual, cognitive, linguistic and motor systems necessary to read. These systems, in turn, depend on utilising older brain structures, whose specialised regions need to be adapted, pressed into service, and practised until they are automatic' (Wolf, 2008: p222). Sometimes individual brains cannot develop pathways between these older brain structures which enable this reading automaticity to develop so some children never learn to read fluently.

According to Wolf it is vitally important that young children are read to and talked to so they come to reading with background knowledge of stories, a wide range of vocabulary, a tacit knowledge of grammar and an awareness of sounds within words, e.g. of the rhymes within hickory dickory dock and the multiple meanings of 'bear'.

So it seems that linking sounds and letters and blending sounds within words is important but so too is language play, rhymes and rhythms, and developing a sense of the wondrous stories and ideas that can be found in books.