The point is - mrz may help me here, she's more of the expert on phonics - is that there is no such thing as really 'reading by sight', unless we can only read a very small number of words, those we have been explicitly exposed to and taught.
'Learning to read by sight' is a limiting strategy - to read a word, we HAVE to have been shown and taught it before. There is no method, in 'reading by sight', to learn new unfamiliar words.
So even though those of us who were taught to read in the 'by sight' era may THINK we learned to read by sight, we ACTUALLY worked out the 'rules of reading' - phonics - from the words we were taught that way, and applied them to new words. That is how we read an unfamiliar word - if we genuinely only read by sight we would be unable to approach a truly unfamiliar word at all.
I know that EXPLICITLY from DS - because he was exposed to phonics so very shortly after teaching himself to read, the fact that he already knew the phonic rules could be directly tested. However i believe that research has shown that it is true of all 'read by sight' readers - and it is why explicitly teaching phonics is so much better as a strategy as it cuts out the necessity for the learner reader to work out the code.