I'm not exactly sure, but I think it has something to do with learning sight words. There is a kit out there call Rainbow Words and works with the Open Court reading series. Basically, students learn their sight words as they are put on the colors of a rainbow. Below is a link to the product, but it looks easy enough to make yourself.
Sight words are those words most commonly found in text that usually can't be sounded out - ones you want children to recognize automatically. There is the Dolch and Fry word lists. (Links provide below.)
As for learning these words in preschool, I would hesitate pushing any child to learn them at this age. The earliest these words are introduced is Kindergarten. A preschooler's eyesight is still developing.