It sounds to me like your DD is definitely in the beginning to read phase. You may have a "sneak" reader, like I have. Around the same age as your DD, my DS was asking what every sign he saw said. Then he lived for road construction, because he loved to read the signs. After sign phase, he kept quiet about the words he knew. I knew he knew many, many words, because if I read something incorrectly, he would point it out. Or he would read a long sign when out and about. I remember saying many times "I don't know where he learned that word - it's not in any of his books." (My DS4 still doesn't like to read to us, but he's warming to doing every other page every once in a while.) From reading signs at 2.5, he could do easy readers just before 3. Between just before 4 and now (4 yrs 10 mos), his reading ability really took off - from Frog and Toad early chapter books to Harry Potter.
I think when DS was late 2, he got his first educational software (prek-k clifford). I think the computer games really helped DS's reading. (I often joke that DS learned how to read so well so he could play internet tower defense games.)
As for sight words, if you google dolch sight words, you can get free lists of them on the internet. Here's what dolchsightwords.org says about whether they can be sounded out or not:
The Dolch Word List is a list of commonly used English words that was originally compiled by Edward William Dolch, PhD and published in his 1948 book, "Problems in Reading". Edward Dolch compiled this list based on children's books of the period, and selected 220 "service words" which children need to recognize in order to achieve reading fluency. Dolch excluded nouns from his main list, but did compile a separate 95-word list of nouns.
Many of the 220 words in the Dolch list, can not be "sounded out", and hence must be learned by sight. Hence the list is often referred to as "Dolch Sight Word List", and the words on it, as "Dolch Sight Words".
