What it teaches
Finding and continuing a repeating pattern. It is the same skill as the number sequences with the arithmetic taken out, which makes it the right starting point for a five-year-old and for any child who is not yet reading numbers comfortably.
Patterns are also where a child first meets the idea of a unit that repeats, which is what multiplication turns out to be later.
What to look for
Say the pattern out loud together — "red, blue, red, blue" — and let the child finish the sentence. Most children who are stuck looking at it are unstuck the moment they hear it.