Letters may be combined and placed in certain orders to create words. While any string of letters together can be sounded out phonetically, not just any string of letters makes a word. A word is an agreed upon combination and arrangement of letters that bears a certain meaning or meanings.
Some letters in the English alphabet function as words by themselves. These are most often "a," which is used as the part of speech called an article, and "I," which is used as a pronoun to refer to yourself when writing or speaking. The letter "o" at times functions as a word in itself when used as an expression of feeling or an exclamation. This usage most often occurs in poetic contexts, as in Walt Whitman's poem, "O Captain! My Captain!"
One may also create a neologism or nonce word. These types of words are coinages and do not have agreed-upon meanings or spellings that cannot necessarily be found in a dictionary at the time of their creation. However, many commonly used words, especially those that refer to aspects of new technology, had beginnings as neologisms.
By sounding out a word phonetically, you can sometimes spell out and arrange the letters into the desired word.