Sing the song while passing the letter bag. When the song stops have the child reach in the bag, pull out a letter and name it, produce the sound, or come up with a word with the same beginning sound. (Could do this with numbers, colors, shapes, or words too)
The kids sort lowercase letters by their features--short, tall, loops and tails. Some letters can be sorted more than one way. For example, a is short and has a loop; p has a loop and a tail. It's fun to find all the letters that can fit into 2 different categories. It's math and literacy all rolled together!