All children need to be taught what a grapheme and a phoneme is and why. A grapheme is the letter representation of a sound, while a phoneme is the sound representation of a letter or letters. The reason why this is important in English is because we don’t have a one to one letter to sound correspondence. So we use two or three letters to make up a sound such as ‘sh’ making a shushing sound. Likewise there are some phonemes (sounds) that are represented with more than one grapheme. The /z/ sound as in the beginning of “zoo” is typically thought of as spelled with a ‘z’, but it is also spelled with a “s” in words like ‘please’ and ‘design’.
The reason to use these distinctions is mainly to assist in spelling, although it does also have a place in reading. I point out a great video by Pete Bowers who explains about the spelling of ‘school’. Note that he talks about how there are 6 letters in ‘school’, but only 4 graphemes and 4 phonemes. While some may wonder why there is a silent ‘h’ in school, there really isn’t. The ‘ch’ represents the /k/ sound, such as in Christmas. The teaching of kids in the lower elementary grades that there are phonemes and graphemes helps them significantly with spelling.
If we were to break down words according to not only their letters but by phoneme and grapheme, it makes it easier for kids to see and remember the words for spelling and reading at a later time.