You have the crown sts on the needle. Now bind off the first 20sts and work across the remaining sts to the end. Turn the work and again bind off 20sts. Now you're going to work on the center 16sts that are left on the needle. The bound off areas just flap at the sides while you work 4.5 inches of the back of the bonnet. When you have 4.5inches, place these 16sts on a holder or spare yarn. You're going to form the hat shape by seaming one of the bound off 20st edges to the 4.5 inch side of the back and then seam the other bound off edge to the other side of the back. Now you should have the bonnet shape.
It is indeed a very sweet pattern. Good luck with it.