Starting school is a huge transition, for kids as well as teachers and I would think that at most schools in prep, the first few weeks are getting the kids used to routines and the way school "works", rather than jumping straight into extension programs. I would be chatting to the teacher about your concerns but also recognising that it is only week 3 and if you were halfway though term 2 and he still wasn't working in like ability groups and being challenged in reading etc. that it would be an issue. I know some of the schools I have taught at over the last few weeks haven't even established their reading groups yet as preps have Wednesdays off for teachers to do their literacy testing and work out where kids are at.
I would also explain to your DS that it will get harder and trickier but that at the moment it is all about making friends, getting used to the timetable, playing games (particularly if it's a play based school) and to just enjoy it! Many schools stream kids in reading according to ability as well as maths so maybe ask if that is case and when that will begin. I know they are starting that at DD's school in prep towards the end of this term.
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