My daughter displayed what I think was a little literacy milestone the other day. We were making blueberry muffins together, from a mix. She picked up the box, pointed to the letters on the front, and said "That say 'Blueberry Muffin Mix'". Technically, she wasn't correct - the wording was slightly different from what she expected (see image to the left).
It's not that she was reading, at not quite 3 years old. But she understood that the letters on the front of the box meant something, and she was able to make a reasonable guess as to what that something might be. She understands that letters make words, and that words have meaning, and tell us what things are. We don't do any worksheets or flashcards, or even active instruction regarding the alphabet. But we do read books every day. And from that, she has learned this important concept. I was quite pleased!
Just goes to show that early literacy milestones can be found anywhere. You just have to keep your eyes and ears open.