Words are made up from small units of sound called phonemes. Phonics teaches children to be able to listen carefully and identify the phonemes that make up each word. This helps children to learn to read words and to spell words.
In phonics lessons children are taught three main things:
They are taught GPCs. This stands for grapheme phoneme correspondences. This simply means that they are taught all the phonemes in the English language and ways of writing them down. These sounds are taught in a particular order. The first sounds to be taught are s, a, t, p.
Children are taught to be able to blend. This is when children say the sounds that make up a word and are able to merge the sounds together until they can hear what the word is. This skill is vital in learning to read.
Children are also taught to segment. This is the opposite of blending. Children are able to say a word and then break it up into the phonemes that make it up. This skill is vital in being able to spell words.
In some languages learning phonics is easy because each phoneme has just one grapheme to represent it. The English language is a bit more complicated than this. This is largely because England has been invaded so many times throughout its history. Each set of invaders brought new words and new sounds with them. As a result, English only has around 44 phonemes but there are around 120 graphemes or ways of writing down those 44 phonemes. Obviously we only have 26 letters in the alphabet so some graphemes are made up from more than one letter.
ch th oo ay (these are all digraphs - graphemes with two letters)
There are other graphemes that are trigraphs (made up of 3 letters) and even a few made from 4 letters.
Another slightly sticky problem is that some graphemes can represent more than one phoneme. For example ch makes very different sounds in these three words: chip, school, chef.
In the past people argued that because the English language is so tricky, there was no point teaching children phonics. Now, most people agree that these tricky bits mean that it is even more important that we teach phonics and children learn it clearly and systematically. A written language is basically a kind of a code. Teaching phonics is just teaching children to crack that code. Children learn the simple bits first and then easily progress to get the hang of the trickier bits.