Obviously, my 3 year old doesn't need to know how to read now, or anytime soon, and if it was up to me, I wouldn't teach him yet. But he LOVES phonics. Some of his favorite activities are trying to sound out bits of text he sees, typing things on the computer and then attempting to read them, talking to me about how things are spelled, etc... I think he just finds the code of letters and sounds to be an interesting puzzle.
My issue is how to explain the rules in the simplest way possible for him. He understands consonant sounds and short vowel sounds, and some of the double vowels like "oo" and "ee", but not the rest of the rules. So he sees something like "to" or "bone" and wants to pronounce them "tah" and "bah-neh", and then asks if he's right. I always end up saying something like "actually, in this word it makes a different sound" then telling him what it says... And I can see he's not satisfied with that answer.
I don't remember learning phonics explicitly, it was so long ago. Are there any resources to help me learn the rules and explain them in language a 3 year old might understand?