I have no idea how I learned to read, whether by sight or phonics. According to my parents I was three and looking through one of those little Dick and Jane books at a relative's house. Someone who thought I was just looking at the pictures asked me what it was about and I started reading it out loud. I had never seen the book before so I didn't just have it memorized. My parents figured I must have just learned while they were reading to me, but i just absorbed it without responding much until I had it all figured out.
I was a pain in the ass to kindergarten and elementary teachers after that, reading the instructions and finishing worksheets before they had time to read the instructions to us.