"or understand the completely different pronunciations for 'here' and 'there'?"
In phonics we teach that spoken language is represented by written language using the symbols we call letters
There are 44 sounds (plus or minus depending on accent) in the English language and roughly 180 common ways those sounds can be spelt
A sound can be represented by one, two, three or four letter spellings. c a t - f I sh - th ere - w eigh t
One sound can be represented by different spellings apron, rain, great, play, they, name, eight, veil, straight, ballet
One spelling can represent more than one sound mean, great, bread (ere can be /air/ in there or /ear/ in here )
"How would one spell out the". Two sounds /th/ / schwa/. (We'd tell the children it's a weak vowel sound so not pronounced clearly)