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There are lots of possibilities for this resource.
I used the ‘Build a Word Folders’ as an independent word work activity. Students would write the headings ‘Real’ and ‘Nonsense’ words in their books, and record the words they made in lists.
You could also use the folders during small intervention groups for phonological awareness. Have students make simple CVC words and get them to change a sound to make a new word (e.g. make ‘cat’ then change the /c/ to /b/).