My daughter's preschool encourages phonic awareness through things like nursery rhymes, songs, stories etc. They need to have this awareness before they can start learning to read. It is basically just awareness of sounds - through rhyme, rhythm, alliteration etc. There is nothing technical or academic about it and you can do it at home just by singing nursery rhymes!
Letter sounds are not actually taught at my daughter's preschool but if they do know them the staff will acknowledge it and spend a bit of time doing letter sounds with that child, but it's not what they're there for.
You could introduce him to letters and sounds at home, if he enjoys that, and he will soon learn to read simple words. But you can't expect a preschool to do formal teaching.
My daughter (4.2) knows her letter sounds but hasn't got the attention span to read more than 1 word at a time!
You have to start by using the small letters (not capitals) because this is how they will do it at school. Introducing capitals too early can cause confusion.
Preschools tend to believe that children don't need to learn to read before they start school, they should just enjoy sounds through nursery rhymes, songs etc and they will learn because it's fun.