"How would a phonics reader know how to read TRY, BUY, LIE;"
When phonics is being taught correctly, children are taught to break words down into individual sounds, and then map them onto letters and combinations or letters, with the teaching teaching them, stage by stage, that a sound is "most often" shown in such-and-such a way, and "less often" shown in such-and-such a way, and so on.
So you would teaching children, to start with, that the sound in question is most often spelt "i~e" (as in kite, fine, pile) or "~y" (as in try, my, by).
A bit later on, the teacher teaches the kids that the same sound is occasionally spelt "~ie" (as in lie) or "~uy" (as in buy).
There are books and charts which clearly set out the more likely/less likely spelling and the order in which they are to be taught.
That is how teaching phonics works.