Most parents have no idea what the term "Early Literacy" encompasses, but it is the single most important topic when it comes to laying the foundation for not only reading success, but establishing a love of reading later on in a child's life.
Early Literacy focuses on the "pre-reader". Kids aged 0-5. There are six Early Literacy skills: Vocabulary, Print Motivation, Print Awareness, Narrative Skills, Letter Knowledge, and Phonological Awareness. These skills are practiced in everyday interactions, through conversations, song, telling stories, and sharing books. Fun activities that children don't even realize that they are learning from.
There are many resources for parents looking to work on Early Literacy. One of the best places to check out is your local library's children's section. Let your child peruse books that they think look interesting. Check out some of the children's CDs or DVDs. Your library may even have an early literacy and/or parenting section which will have tons of ideas to aid you on your Early Literacy journey. So explore, dive in, and have fun. As long as you and your child are having fun, you can't "do" Early Literacy wrong.