Hi OP, I'm no early years expert but my oldest is about to turn 6, in Year 1.
He's already verbally expressing sadness that there is less time for play at school than before (he calls it "choosing time"). At 5 years old, for the school to fit in all that they need to into the day, the children have to be quiet and attentive in lessons for maths, literacy, phonics, science, all through the day.
My DS is doing really well with his attainment but he is starting to miss the freedom of 'just being a kid who can play'. At 5 years old! I think it's too early for that. I'm sad for him.
Pre-school, I played a lot with my kids, had the option of reading together during the day and reading stories at bedtime. I gave them a lot of 'choosing time' for them to follow their own imaginations too, and play their own games, and sometimes even to just be bored...
In your shoes I would not decide to actively teach a tiny toddler to read. I would just let them be a child, and play, and explore. They will have decades and decades of being a grown up - childhood is such a short window, let them enjoy it. School comes soon enough.