Letters form words. Words form sentences, and sentences get our thoughts out there, for better or for worse. Montessori's reading readiness beliefs hinge greatly on the moveable alphabet and sandpaper letters: I begin there with Bear so that his sentence building skills will develop in to the "for better" type.
I filled a wooden tray with sand; sifted from Bear's sand pit if you must know. Bear set about tracing his fingers in the sand, getting the feel of it, and forming letters or shapes that he is familiar with. Occasionally I will show him a letter, have him trace it and then practice writing it in the sand.
There are so very many things that one can do with sandpaper letters and a tactile tray. Tracing letters of course, but we also like to play "I Spy" games where Bear finds and then traces the beginning sound. Sometimes we root around in a container of odds and ends that is filled with objects with simple names (pen, ball, pig, bug etc). Bear picks one out and we discuss it's sounds, finding some sandpaper letters that go with it and then eventually trying to "spell" it in the sand.
Are you cringing about the sand? Montessorians also believe that if a child is shown the correct way of doing something and given the responsibility to follow through, then they are much less likely to destroy it or consistently handle it incorrectly. I was a teeny bit wary of the sand at first too, I mean after all, my boy ADORES sand, but you know what? He's as neat and tidy as Alice at her tea party when working with his sand tray. Not so much when working with his construction vehicles in his pit...