Never heard of a phoneme, have you?
In the human language, a phoneme is the smallest unit of sound and is one of the MOST important aspects of learning to read because without learning how to isolate individual sounds a child can not learn to connect units of sound or isolate units within larger groups of sounds.
For example, isolated sounds are connected to written letter forms and children can easily match the same beginning or ending sounds (unless there are some learning disabilities like auditory processing).
Cat, bat, mat,
Note that phonemic awareness is auditory and does not involve words in print …read more

Decoding is the ability to apply your knowledge of letter-sound relationships, including knowledge of letter patterns, to correctly pronounce written words. Understanding these relationships gives children the ability to recognize familiar words quickly and to figure out words they haven’t seen before. – Reading Rockets

If children can’t decode words then they can’t work their way effectively through increasingly harder texts. What happens then is that their frustration level rises and teachers and parents start seeing them struggle and fall behind. Comments like “I hate this” or “I can’t do this” start to become common place.
Decoding is the ability to read …read more

The technical definition of phonics refers to the instructional method of teaching kids to read because Phonics means teaching kids to connect the sounds of the language with letters or groups of letters. It also teaches them to blend the sounds of letters together.
So, when you hear the infamous term “Hooked on Phonics” it means that someone is hooked onto learning the connection of sounds.

In 2000 the National Reading Panel reported that there are five traditional components that every child should have in order to be able to read:

Phonemic Awareness
Phonics
Fluency
Vocabulary
Comprehension

Simple, right? In theory.