Don't want to answer for newmom but it is a sign that the child is relating to words as more than just an object on the page and is one step closer to deciphering the code. But all kids don't have to go through this stage to be able to read. It really comes down to personalities of the children and methods parents use when reading. Some people are in the habit of running a finger under the word as they read and some (like me) don't. If you are the type of parent who reads to their child with a finger under the word than the child will likely pick up on it.
