Pay attention to the 13 minute mark,which details notes on the fret board.
If you have introduced yourself to basics of the CAGED system,this video will bring more light to you,regarding how really easy it is to mind read.
This vid is not about the CAGE system.
Sight reading is learning from pictures,in this case guitar strings on frets, in relation to the opposing sheet music notes,and tieing them together to create or embed an image in your mind for a better learning experience.
I think Pebber Brown presents this relationship very well in this video.