Jim Yang (https://www.childrenlearningreading.org/) and Spencer Russell (https://www.toddlersread.com/) both provide early reading materials/programs. In my opinion, they—and the growing number of unrelated people who have vlogged their efforts to teach their children early reading—have successfully demonstrated that many kids can successfully begin learning to read as early as 18 months, with many of those kids going on to be very strong readers in 1-2 years of practice. I’m sure it’s not for every kid, but if you have a child who seems attentive and interested, I personally think it’s worth strongly considering getting started early.
I personally started to teach my son to read at 2.5 y/o. I would’ve started earlier but just wasn’t even aware it was a remotely feasible thing until I stumbled upon videos of Jim Yang’s kids reading at 2. I read his book and used his program to start. It’s really just a simple phonics program. The only secret ingredient seems to be breaking the lessons into bit sized, 5-10 minute lessons you do 1-3 times a day (e.g. at meal time). That said, I did find his book very helpful to me for learning the fundamentals and theory behind phonics instruction since I had no prior experience with phonics. I haven’t looked at Spencer Russell’s materials but from what I’ve gleaned he takes a very similar approach. I’m also aware of people out there, like “Homeschool Doctor” Dr. Theodore Nyame (https://www.instagram.com/homeschooldoctor/?hl=en), who seem to have taught their children to be very strong early readers starting with their own improvised, basic phonics instruction.
After completing Jim Yang’s program, we did a program that appears to have been a repackaging of 100EZ lessons, and then we basically just read a lot, almost every meal. I also started doing Fry-Dolch flash cards with him daily, typically right before we did something fun like the playground. It was essential to me that the process always be without pain or frustration, so we read whatever my son was into (yes, Ninja Turtle books and such abound), and I read to him whenever he didn’t feel up to it (which was frankly 95% of the time in the beginning—I often just had him read the last 1-3 words in a sentence). We even had brief periods where we took a break from reading altogether.
Now, my son is almost 4 years old, and I’m very happy with his reading. He reads everything around him when we’re out, and he reads a new book (typically around 2nd grade level) out loud to me each night with virtually zero error. I also still read a lot to him. He loves reading, it’s unlocked many fun things for him (e.g. games that require reading, or having his own e-mail address where he sends and receives cute e-mails), and it’s left me feeling relieved in his schooling ahead. I can focus the bulk of our work together on other skills and topics, and I don’t have to worry about trying to teach an increasingly energetic and distracted child something as complex as reading.
I only have one child and no other experience with childhood education, so I can’t gauge how much aptitude may have played into my son’s success with early learning, but I wouldn’t be sharing if I thought it played a substantial role. I didn't have any special reason to think he could read early; I just saw Jim Yang's stuff and decided to give it a go. Some of the kids from the resources I shared above became even stronger readers than my son even earlier, and none of them were screened for giftedness or the like prior to starting, so I'm inclined to think it’s more feasible than not for a lot of kids, but of course I’ll leave that to everyone’s own assessment.
Good luck with your grandchild! Based on what you shared, it sounds like she’ll be a great reader in due course regardless of what you choose to do.