A couple of years ago there was an email going around that claimed to explain how we read. The email began:

"Aoccdrnig to a rscheearch at Cmabrigde Uinervtisy, it deosn't mttaer in waht oredr the ltteers in a wrod are, the olny iprmoetnt tihng is taht the frist and lsat ltteer be at the rghit pclae. The rset can be a toatl mses and you can sitll raed it wouthit porbelm. Tihs is bcuseae the huamn mnid deos not raed ervey lteter by istlef, but the wrod as a wlohe."

Considering how scrambled up the letters are, it seems strangely easy to read. But sadly, before you ditch the dictionary, I have to tell you it's a bit of a con. A psycholinguist working at Cambridge University explains that although we don't read each letter individually, the middle letters still play a big part in reading.

Hardly a surprise I suppose but after reading the text above it's easy to be taken in.

Matt Davis describes the research
Snopes - urban legend reference