If you go to the "learn to read" section and click on one of the books, you will see how you (or your son) can try to sound out the word, then click on the word and the program will sound it out for him. My kids play around in all sections though and they don't think it is too babyish. There is also a "more starfall" that you pay for but I haven't used it.
With both reading eggs and headsprout, the child goes through in a certain order. They do one lesson at a time and it builds on it. My oldest is liking headsprout right now. She kinda thought reading eggs was a bit babyish, but she is 8. My 5 year old loves reading eggs. She likes headsprout too, but it moves a bit faster. My 5 year old can sound out some cvc words and can also spell some cvc words by looking at the sounds. For her, a combo of reading eggs and starfall are a great pair. My 8 yr old is dyslexic and I am using headsprout as a way to review things that I think she is finally grasping well. I am hoping to build fluency a bit before we move on with her. I think my 5 yr old will pass up the 8 year old within a year or two. She seems to be following the pattern of my oldest.
ETA: they have some free trials available. Have your son try first. If he thinks it is babyish/boring/or too much like being "taught" vs having fun with learning, it probably isn't the best fit.