In general, early reading is less remarkable (in English) than people think it is, because with the right materials[1] English can be seen by a young learner as a rather consistent writing system that is not insuperably hard to decode.
That said, my four homeschooled children, the first two of whom are strongly bilingual in Chinese and English, having lived in Taiwan in early childhood, were early but not strikingly precocious readers, and all my children were learning a lot of other things besides reading in their early childhood, of which chess was perhaps more conspicuously precocious than reading. Earliness is less important than long-term solid development of skill, and it sounds like the parents of some of the HN participants here who have personally observed examples of very precocious reading were well aware of that.
[1] http://www.amazon.com/Teach-Your-Child-Read-Minutes-ebook/dp...
http://www.amazon.com/Lets-Read-Linguistic-Leonard-Bloomfiel...
http://eps.schoolspecialty.com/products/details.cfm?serieson...
Another friend of mine found out their son was a reader when he started kindergarten. He was always 'reading' the books in the house, but his parents thought he had just memorised them from being ready. In fact his kindergarten teachers gave him new stuff to read and he lapped it up. He was reading the first Harry Potter book by the second grade. My friend actually got frustrated because his son didn't want to do father/son things, but preferred to read.
Some kids are gifted readers, just like some are gifted at hitting a ball with a bat. The important thing is (a) spend extra time and attention if it is clear they do have a gift and (b) don't feel like your child is somehow behind if there is a kid like this in their class.
My intuition (based on anecdotes and observations, not hard data) is that nature provides a starting point, and perhaps an ultimate cap or speed limit to growth, but nurture provides the year over year progress. The most successful people I know nailed the nurture (or hard work) part of the equation. They were all at least smart, but very few were the smartest in the room at a young age. Over time they've appeared smarter and smarter to their surrounding audience.
But I actually tried to stay away from topics like this in "Experimenting With Babies," because, well, how many readers are going to be able to experiment on a kid who can read fluently before age 3?
However, if you're interested in learning more about the topic, you might find this resource interesting:
http://www.davidsongifted.org/db/Articles_id_10162.aspx