Here it transitioned very easily from seeming to have memorized words to be able to read pretty much anything fluently. We didn't teach reading or phonics, nor did I ever observe that slow sounding out process that I thought was always a part of it. No problems ever resulted from this approach (child continued to read well, was good at spelling and acquiring new words through reading, etc.) My guess is what happened is that phonics was sort of figured out along the way as the database or words grew larger patterns became obvious. Later when exposed to phonics teaching materials the child found them really confusing so I don't think it would have been a helpful step to formally teach phonics early.
So, my advice would be hang back. Offer support as requested but try to not to worry about the way your child is learning. Clearly he is figuring out something that is making sense to him.
