No, I don't think a child needs to know how to read (although, to be fair, DS could read when he started using it). I just asked DS (because I don't recall seeing much reading on it) and he said it will read to you.

I think it depends on your DC - I saw your other thread (and you DS DOES sound very advanced!) and if your DS enjoys it, I would let him play. My DS LIKES math, so he enjoys Dreambox. Why not do a free trial (no, Dreambox, doesn't pay me - LOL!)?