Here is a very excellent analysis of this popular and relatively ancient bit of Internet memery, by an actual Cambridge researcher:
http://www.mrc-cbu.cam.ac.uk/~mattd/Cmabrigde/
Here's an excerpt:
it doesn't matter in what order the letters in a word are, the only important thing is that the first and last letter be at the right place
This is clearly wrong. For instance, compare the following three sentences:
1) A vheclie epxledod at a plocie cehckipont near the UN haduqertares in Bagahdd on Mnoday kilinlg the bmober and an Irqai polcie offceir
2) Big ccunoil tax ineesacrs tihs yaer hvae seezueqd the inmcoes of mnay pneosenirs
3) A dootcr has aimttded the magltheuansr of a tageene ceacnr pintaet who deid aetfr a hatospil durg blendur
All three sentences were randomised according to the "rules" described in the meme. The first and last letters have stayed in the same place and all the other letters have been moved. However, I suspect that your experience is the same as mine, which is that the texts get progressively more difficult to read.[...]
Hopefully, these demonstrations will have convinced you that in some cases it can be very difficult to make sense of sentences with jumbled up words. Clearly, the first and last letter is not the only thing that you use when reading text. If this really was the case, how would you tell the difference between pairs of words like "salt" and "slat"?