Cdnuolt blveiee taht I cluod aulaclty uesdnatnrd waht I was rdanieg. The phaonmneal pweor of the hmuan mnid. Aoccdrnig to rscheearch at Cmabrigde Uinervtisy, it deosn't mttaer in waht oredr the ltteers in a wrod are, the olny iprmoatnt tihng is taht the frist and lsat ltteer be in the rghit pclae.

http://blog.ted.com/2005/11/raed_tihs_yuor.php

Anyway, I just think you don't just need the first and the last letter. You don't read one letter at a time, so you can just go faster and pick up "clues".

u...d

What word is that? You can't know. You need clues. Clues comes from context (whole sentences), length of the word, and the letters in it too.

uxxxxxxxxd

What word? Still too difficult.

undreanstd

Heh, seems easier. In context, it would be understandable. But notice that some "clusters" still give you some clues. Dr, st, ean, un... Let's swap them around and see if we can remove those clues:

usdnnrated

Seems more difficult. That's the one in my version, where I even tried to create some false clues, making it sound like something that might really exist (it ends in "rated").

So your brain needs clues to guess. I don't know what they are exactly or how many there are, but those who studied this thing should know. Interesting though.