my son is 4, and he is reading already. i can't take the credit as he was also in preschool since he was 3 p/t and then 4 he went for free VPK. anyways, they start off with phonics of the letters. how they sound. once you know how they sound then you can start off with flashcards of the sightwords (the, a, as, and, you, was, have, has, he, she, him, her, to, it, is, if, of, etc.) once they know that then you can start with reading. most children can't read until they get into kindergarden. check out the website www.starfall.com. it has the reading rules on there also. Like "silent e at the end of the word make o a long sound", and such. it's very helpful. they use it in kindergarden and preschool. my son does the rookie readers like "Rain, Rain," "Please, Wind?", "Hello, Sun", "Paul the Pitcher" "Hot Rod Harry", etc. they have repetitive words and a word list in the back. You can read a page, and then your son can read a page. Run your finger under the words so that he can follow along as you read.
HTH