Hi tex - it is really tricky for adults, who have been reading and writing for years without giving it a second thought, to try and work out how all this letter and sound business works! It is actually quite complicated business and to us who, again, have been doing it automatically for years, it can seem amazing how kids learn it at all.
Firstly, learning sounds AND names, lower AND upper case can be managed quite well by many children but is a lot of information and can take a long time, or by those who struggle, is too mcuh information and they never do learn it all properly.
Lower case is the type that children will encounter most of - indeed, we all do - in books, newspapers, in these messages! Of course capitals are encountered; at the beginnings of names, but they are learnt as they are encountered and at a slower rate.
Sounds are the things are best learnt rather than letter names, as this is how our written language is created. Writing is just a representation of what we say - the words that come out of our mouths. Everything we say is just a bunch of sounds joined up. Some words are just one sound - I, a, oh, etc. Some are two sounds stuck together - an, off, out, it etc. Some are three sounds - cat, sun, when, hop, joke etc. I appreciate this is hard to comprehend when you are reading the letters rather than hear me say the sounds and words, for example, 'joke' might look odd as a 3 sound word the way it is spelled but when you say it, you say 3 sounds: j - oa - k.
Our written language was constructed to represent these sounds. But there are over 40 different sounds in our spoken words and we only have 26 letters to represent them. So some letters have to be used twice and more often than not, be stuck with other letters for one sound.
So, the letter 'a' can be used for the sound in the middle of cat and fan, and also for the sound at the beginning of also and always, and also put with i for ai like in rain, and with an o for oa as in goat etc etc
By learning all these sounds and all the letters that represent them, children see a word and recognise those letters or groups of letters; know what sounds to say and how to blend them to hear the word again.
Learning the letter names does not help with this. It only gives us something to call the letters by but doesn't help with reading or spelling in its early stages.
However, there is a need to call the letters something and people know they represent sounds, so decades ago, and I don't know when or certainly why, but someone gave the letters the sound most commonly associated with it and the letters were almost referred to that as if it were its second name - e.g. 'S' (ess) became 'a suh' and so the a, buh, cuh, duh, e, fuh, guh' etc was born. This, however, is terribly misleading and is not even pronounced correctly, so many children do not learn to read via 'phonics' if it means learning the 26 letters by that one distorted sound.
Schemes like Jolly Phonics make phonics more thorough and systematic. They simplify a complicated business. They also make it fun and multisensory. All these things make it the most successful way to teach children to read.
Children are also taught to read via other strategies, such as using the pictures to give clues as well as reading ahead and making a sensible guess as to what the word might be from the sense of the story. However, these were largely developed from the phonics being so ineffective in the past and children needing more help than just the 26 letters and their 'sounds.' With all the correct knowledge and taught effectively, such guesswork strategies are redundant.
The Jolly Phonics handbook and site explain a lot about it and they also have a messageboard where you can ask more questions. There are also other sites around that explain this reading philosophy such as the Reading Reform Foundation who also have links to other sites.
Many schools have been teaching reading like this and have been achieving outstanding results. It looks likely that it will be introduced into the National Curriculum sometime in the not so distant future. Even where it is not taught now, it is now commonly believed that phonics needs to be taught more rigourously and effectively than traditionally done.
I hope this gives you some help - please feel free to ask questions if you like. There is a fab book that explains it all - Diane McGuinness's 'Why Children Can't Read' - but it is a very intense read! I summarised it in a document for colleagues when I was working as I knew they would be interested in the contents but unable to plough through it all! if you are happy to leave your e-mail address, I can send it to you; or message me here and I'll give you mine.
Hope this helps.