Book 5b of the Key Words with Peter and Jane reading scheme showcases Peter and Jane enjoying outdoor activities, introducing 46 new words such as 'how', 'from', 'soon', and 'street'. After completing this book, the child advances to book 6b. The scheme relies on gradually introducing and frequently repeating key words to help children identify them on sight, using the 'look and say' approach. Examples of key words include 'the', 'one', 'two', and 'he'.