Sight words are high frequency words that should be known by "sight". With that broad definition, up to 75% of all the words in beginning children's print material are sight words! I have a very different definition where only words that cannot be decoded easily are considered sight words.
In schools and everywhere else, children are encouraged to memorize the configurations of words. In the earlier grades, children bring home from school a handful of "sight words" to memorize each week, and I get a good chuckle as I skim through the sight words my kids must memorize. Using my definition, almost none of these words can be considered sight words, and besides, my children could read all of these words at just 2 years old.
So why is it a bad idea to start teaching using sight words? Great question!
You see, English is an alphabetic language where the words we see comprise of individual letters or a combination of letters which represent different sounds, and these sounds combine together to form the words we hear. When you teach the memorization of sight words, you are in effect teaching English as if it were an ideographic language such as Chinese, where each character represents a meaning, and the only way to learn is to memorize the shapes of the characters.
When a child learns to "read" through memorizing word shapes, that child must rely on visual cues to try to figure out what a word is, and this quickly leads to confusion and frustration. The key stumbling block is that there are so many words with similar shapes that look alike! This method also puts severe limitations on how many words a child can learn to "read", or memorize.
The confusion of word shapes is often a cause of reading difficulties leading to skipped, inserted, and substituted words. And so often, when I work with students with reading difficulties, I have to first break their habit of seeing words as a whole, and show them that there is a simple and effective way to figure out what a word is by its parts.