It seems to work decently well in the sunlight. Enough to make out names. Some things are a bit washed out, but it's certainly functional. It helps that most lists are dark characters on a white background.
It doesn't have an auto adjusting light sensor. Apple thought the iPhone changing brightness often would be distracting. If you walk outdoors while using it, put it to sleep then wake it up. The light sensor only takes readings/adjustments when it wakes up.