Hi E.,
Both of my kids were recognizing letters and numbers before 18 months, and had letters and their sounds down by age 2. I know other parents who have kids in kindergarten still working on getting their letters and sounds down -- so I think there is a big spectrum.
We love Leapfrog's Letter Factory and Math Adventure to the Moon (my kids also love Let's Go to School, the Amazing Alphabet and Numbers Ahoy). Everyone I know who has and uses Letter Factory has little ones that know all of their letters and their sounds at a really young age. =) They are such a great resource... my 3-year-old can count by 2s, 5s and 10s thanks to Math Adventure to the Moon. (BTW, we're not a big TV family, but I'm happy to let them watch these two videos a few times a week!!)
I am a big reader and wanted to instill a love for reading with our kids. We try to make letters fun. We have Leapfrog's Fridge Phonics (which works nicely with Letter Factory -- the same songs), foam letters for the tub, and wooden letters to play with. I also found a fun craft where we painted letters and numbers on rocks -- we keep them in a bucket on the porch. My 20 month old loves them.
We also do a lot of coloring letters. I write the alphabet out, and they scribble on them. They're too little to really be tracing the letters yet, but they like to name the letters and then try to draw them.