I introduced these to L at around 17 months and she loved them. Once we got going she picked them up quite easily. I keep them all in a small box we call the "phonics box". I don't keep them out but often ask her if she'd like to do them or she will ask for them.
I've sort of combined the Montessori Method with Jolly Phonics where the sounds are introduced in seven different groups. At the moment we are on the third group.
Once she'd learned the first group I introduced the magnetic letters as well. She loves to say them and match them to the sandpaper letters. As these are home made out of paper we didn't start tracing them right away because she constantly had her hands in her mouth. We've only recently started tracing them so we have a bit of catching up to do there.
After she'd learned the first two groups I introduced some words. I put the card over the word and she sounds out each letter. This takes a lot of concentration for L and we only do it in very short stints. We also match the magnetic letters with the word and picture. We've only just started doing this one and I'm taking it very slowly at L's pace. We also play the eye spy game which she is just cottoning on to!
I'm not sure when she'll start reading but I'm sure after a while everything will just click. She often points out the phonics she sees in books, and when we're out and about. I wish I could get some small figures for her to spell instead of just pictures but I can't seem to find any.