Here is an excellent example of the difference between ‘sounding out’ and thinking / chunking groups of letters in order to solve words. (Found at thegototeacher.blogspot.com)
Whilst it is often possible to sound out simple words, e.g. c-a-t, it would be impossible to sound out the words, letter by letter, contained in the sentence The other night l drove to school.
By thinking about the message (what would make sense) and grouping letters together, the teacher who created the poster demonstrates how the words might be solved- The other night l drove to school.
It is much more useful for new readers to be shown that some letters often go together in words to make a new sound, e.g. sh, the, ch, ow, oo, ew, ai, aw, wh, igh. Simply telling the child to ‘sound it out’ is only effective for a small number of words and it is not a useful habit to develop.