Just went to my dd2's reading meeting in reception yesterday - she is youngest of 4 (showing willing). Teacher said they didn't talk about ability in reception, but readiness. So they do put them in groups, according to what they're ready for - so some children can read words, while others are not yet at the stage of identifying that letters make certain sounds. She stressed that at thsi stage they all develop differently and at different rates.
I thought this was a very good way of putting it and very true. My ds1 struggled in reception really but was well away with reading by y2 and is now absolutely fine in all areas. My dd1 was more the steady progress type and ds2 was a bit of a mix of the two, fantastic at maths in reception but a bit slower to get reading fluently than the other two.
So I would try not to get hung up about it - I think it's actually better if they split them up for some work and most reception teachers should be sensitive to moving children up and down ability groups as needed.I would do other things at home, playing with them , making things, cooking, etc and just support school with stuff like reading books and spellings later on.In my experience getting fixated on what group your child is in(as I did when ds1 was small) is counterproductive.
I think usually now (at least in our school)children don't do one to one reading in school, they do guided reading in an "ability" group. This is a big change from how it used to be when ds/dd1 were small, apparently it works as well? They do sometimes read with helpers and so on but not with the teacher.