Sight-reading is basically using your memory to memorize what is on the page and then playing it.
"Jack fell down the hill because his sister, Jill, pushed him."
In each of these words, you recognize them because you remember them from when you learned them years earlier. Then you just say them in the sequence and you have just read aloud the sentence.
However, if one or more of these words are unfamiliar to you, for example: "because" and "pushed", then you would need to stop reading and look over the word carefully to see all the letters that comprise the word(s) and perhaps pronounce them phonetically or even consult Mr. Webster.
"Jack fell down the hill b-e-c-a-u-s-e his sister, Jill, p-u-s-h-e-d him."
"Excuse me, Mr. Webster, how do you pronounce these two words?"
And of course he even tells you the meaning of these two words.
So now that you know how they sound and the meaning they conote, you can now say aloud the sentence:
"Jack fell down the hill because his sister, Jill, pushed him."
And because you now know what these two new words mean, you can identify them when they appear in different sentences:
"Then Jack climbed the hill and pushed Jill down the hill because he wanted revenge."
However, because these words are still new to you, you may still stumble a bit when you come across from them but very soon with more reading, you will become much more fluent and will not stumble. Unless you did not know how "r-e-v-e-n-g-e" was pronounced, in which case you repeat the process.
Coincidentally, I have just realized this a couple of days ago when practicing to sightread from a children's book and came across the same Gmaj triad, 2nd inversion on another piece the next page and found it so much easier to play it at sight than the previous piece the page before. And so my conclusion thus far is this: learn a lot of simple repetory from easy children's books as the collection of notes are the foundation of much of the vocabulary that will be used in more difficult repetory. This description is of course just about musical "words" but this also applies to tempo and rhythm which I have also found to be much easier when they repeat in different pieces.