Being able to decode words confidently is like toddling. To be a reader you need to be able to run.
Can decode words and blend them
Decodes faster and faster, but never starts to read fluently
You "see" words and letter patterns with your visual cortex, which interprets the signals coming from the eyes. Your phonetic knowledge of the sounds in words is stored in your auditory cortex. So the fundamental element of decoding and blending as you read is to connect the visual cortex recognition of a letter pattern to the phonetic knowledge in the auditory cortex.
Once you can do that confidently you will be able to decode most words.
But, as any good reader will know, the words just seem to "flow" off the page. There is no sense of decoding them. The reason you can do that is the brain has a specialist area of cortex that allows it to recognise previously seen patterns.
My theory is that it is based on allowing us to navigate in familiar countryside. Walking through a familiar forest you can come to a junction and immediately know where you are, even though you are surrounded by trees and bushes very like at every other junction. But at this junction there is a particular mix which the brain has tabbed as junction X. If someone took away a couple of the bushes or added a fake tree, you might easily get lost because you would be unsure of where you were.
In the same way, the brain does an instant analysis of the letters in a word and calculates the percent likelihood of what phonemes they are relating to. So complex words with very common phonemes (like 'trigonometry' for instance) are much quicker and easier to read than shorter words with less common letter patterns (like 'reign'). You may not notice it, but it is measurable.
With a word like 'reign' the rapid pattern recognition cortex has to do some work, whereas with 'trigonometry' each letter pattern has a 99% chance of being the one it turns out to be. So they just slot straight into place.
It is possible to bypass this rapid pattern recognition cortex completely. In that case you are stuck plodding through the decode and never leap to the higher level of fluency and speed.
There are two ways to engage this bit of the brain. The first is to decode each phrase of 4-5 words and then reread it until it is fluent, before moving onto the next phrase. That seems to help build fluency.
The other techinque is to play anagram games with letters. That pushes the brain to see the pattern in a word and sort it into the right order.
I can show you that in action by scrambling the letters in some text. As you raed tihs txet it shulod be psosilbe to uednresatnd the maeinng at amlost the eqiuavlnet speed that you normally read at. Srupirisng, isn't it?!
By the way, if the paragraph above makes no sense, it probably means you are sight-reading words rather than decoding them.