When our DS was two he had 'Boots' waterproof suit with a capital 'B' on it. We made the mistake of telling him letter NAMES and not 'sounds' - but it WAS over thirty years ago!
He would see a GB plate on a car and go "Beeee"! More problematical was when he said "Why" for "wine"!
So keep sounds as accurate and 'pure' at you can - so, 'h-h-h-house' and 'b-b-b-ball'.
'sh', 'ch' and 'th' will be taught - so I think you can probably safely explain that SOME sounds need TWO letters to make the sound.
As a historic aside, thirty years ago when I was first a TA, 'tr' WAS taught as a 'blend', and I spent hours with boys going 'tr-track - train - truck - trip' etc. Nowadays it is taught as two sounds: 't'-'r'.
Cbeebies Alphablocks is an accurate model of how to do it:
www.bbc.co.uk/cbeebies/shows/alphablocks
And if you want a book that will serve you and DD for many years to come:
An inexpensive and easy to use book, that can encourage children with reading, spelling and writing, and really help them to understand Phonics, is reviewed in the MN Book Reviews section. Just search ‘Phonics’ and my name.