We read words, not letters - but only after we learned to read the words correctly!

As I've heard the comment several times now, let me add that this effect sets in once people are really fluent readers - they learned how to read the words letter by letter - which is what we need to do for every new word we are not familiar with. The effect of recognizing familiar words as an entity sets in after this learning phase. That means that it was a huge mistake to try to teach children to "learn entire words" instead of teaching them to read the letters, first.