It's a well know fact that children learn from their peers. Children are often able to learn more from their peers about a lesson than from a teacher. Peers think on a child's level where as the teacher may not always be able to. This method of learning can be applied to any subject including literacy.
This type of learning can be called the social practices discourse. "Social practice discourse describes a recursive cycle in which two-way mediation between the child and others in the social and cultural environment creates a zone of proximal development, a space where mentors facilitate as novices learn literacy to mediate the environment."
Children feed off each other when learning. When in literacy center, two children do some creative writing. When finished one child hids his work from another. When the other child notices this she tries to guess what the other has written. It becomes a guessing game. In the end the girl is able to read what the boy has written.
Teachers role is to listen in on these conversations and learn about the children and what they have been exposed to culturally and socially in their environments.