Phonological awareness is the awareness of what sounds are and how they come together to make words. Children begin to develop pre-reading skills before they even start to learn and recognise letters. Children are taught Phase One phonics in nursery, which focuses on getting children to tune into sounds and spoken words. They don't need to see letters to begin to practise reading skills. I have written a post all about Phase One which explains the different aspects and the type of activities that are used.