Well, I think that probably most of the parents who post here-here mean "reading" the way typical adults use the term. That is, decoding, articulating, and assessing meaning from the use of that written language.
The whole package.
Do most parents in real life use the term that way? My experience suggests not. I have known other parents to consider memorization of baby/board-books to be "reading" and others who considered phonemic awareness to be 'reading' in ways that I didn't think really crossed the threshold into actual literacy. But really, it's not my place to judge either way, so I don't.
I think that it may be hardest to know with whole language readers-- because they aren't using conventional decoding. So what becomes "reading" instead of "recognition of a memorized image?"
I think some of this relates, ultimately, to what a child can do with text in a NOVEL context. That is, can s/he manage to decode/recognize and extract real-world, independent meaning from text that s/he has never seen before? That, at least in my mind, is when true reading begins. This is what children are doing when they recognize the word "stop" (just like the stop-sign) in, say, a newspaper headline, or the instructions for the new toaster.
With emergent literacy, this is why it is often far more useful to evaluate on the basis of native behavior than on 'tested' behavior in artificial conditions. Some kids can memorize a stack of cards with Dolch entries without really 'reading' in any functional sense, and some kids can't memorize any of them, but can sound them all out without knowing what any of them mean... and some kids can read them silently and know what each term signifies.
This is something that leads early educators to be super-skeptical of placing too much emphasis on literacy as a marker of LOG-- because it's something that is so easy to hothouse in the age range 3-6yo. As a sole indication of LOG, I think (personally) that literacy is HIGHLY overrated for this reason. It's too dependent upon environment, IMO.
My DD's functional LOG seems way higher than her age at acquiring literacy (the way I define it) would have indicated. What I think was more significant, judging from ten years past that point-- is the rate of mastery. She went from c-v-c decoding to Harry Potter in way less than six months.
Now, I think a rate of literacy acquisition like that is indicative of high LOG, but far from a necessary condition for high LOG.
So in other words, I think that if you're looking for functional evidence, you don't need to have seen EVERYTHING on a particular checklist-- just any particularly striking thing that resonates firmly.
