OK. Had a quick look at the link.
That package is for music THEORY, which is pretty much the same as I meant by "general musical literacy". This is of course important and the more it can be explored via fun things like computer activities, the better. There are a million such packages around and I couldn't honestly tell you which is best, or whether this one is worth the money. There are also a million different ways of approaching music theory. But really, there's something to be gained from most angles, and they all end up cross-fertilising each other in the end. So I can't see how it could do any harm.
The difference between music theory and sight reading, is that theory is about non-time-dependent knowledge. "Knowing" that a treble clef is a treble clef or the top line of the treble stave is F, is like "knowing" that 2+2 = 4 or that Henry VIII had six wives. You can take 1 second, 2 seconds or 5 seconds to answer, it doesn't really make any difference. Although of course cumulatively the quicker you can access stored knowledge, the better.
Sight reading OTOH is a realtime activity, to so with the application of that knowledge to actually playing an instrument. So if you're playing a piece at the speed of 60 beats per minute, and there's an F on the top line of the treble stave on the next beat, you have to play it exactly one second after the previous beat - not 2 seconds, or 5, or even 1/2 a second. The object isn't the knowing, it's the doing. When doing is time-constrained (as all doing in music fundamentally is), it is a deeply different thing to knowing.
You might assume that someone with good theory knowledge will be a better sight reader, and it's certainly a contributing factor. However there are other factors as well. In my experience, people with very good natural sense of rhythm and pulse often make the best sight readers, as long as their theory is up to it, because it's like the have to go on and keep playing in realtime, no matter what.
Just my 2p worth to bear in mind if you're dealing with "sight reading" in grade exams etc. Like I said, theory is of course valuable too and any way you can get him to enjoy it can't be bad.