Letters can be used to represent words. That is to say, the sounds of the letters can mimic the sounds of words. An example of everyday use of a letter word is the promissory note called an IOU, which stands for, and sounds like, "I owe you". Letters used to present words have been called "grammagrams" by Richard Lederer and "ABC language" by Willard R. Espy. Two books with collections of sentences composed with letters as words are CDB! (Aladdin Paperbacks, 1968) and CDC? (Farrar, Straus, and Giroux, 1984), both by William Steig. The most well-known example of letter words is the conversation at the restaurant.
Brandt, William E. Jr.
"A Dictionary of Letter Words,"
Word Ways: Vol. 36
, Article 6.
Available at: http://digitalcommons.butler.edu/wordways/vol36/iss4/6