Is there specific a place in most people's brains where words are recognized as whole units (as opposed to being seen as groups of individual letters)? Apparently, yes...
At least that's the conclusions of a group of researchers headed by Laurent Cohen of the Hôpital de la Salpêtrière, according to Science Daily. The group of researchers is studying a 46-year-old man who lost his ability to recognize whole words after surgery to relieve his epilepsy created lesions in a particular area of the brain. The report was published in Neuron magazine as a case study. The case is important because most people with lesions in their brain have them in several locations. But this patient's lesions are located only in the area thought now to involve word recognition.
The research could have profound implications for the study of reading disorders like Dyslexia. While technical definitions exist for the term "dyslexia," almost all reading disorders have come to be subsumed under that label in common usage. This case study may help researchers finally distinguish between disorders involving word recognition and disorders involving letter-sound association and decoding. The patient in the study can evidently still sound out words; but he has lost his ability to recognize sight words (words that are recognized immediately without the reader going through some analytical process to identify them).
"Word blindness" is sometimes also called alexis or visual aphasia.