Many patterns use 'work' as a generic word for the verb knit, and it means to knit or purl in pattern. 'Work even' is used after increases or decreases to show that you continue on the same stitch number with no incs or decs, again, staying with the stitch pattern.
The Rnd1 and Rnd 2 that you posted are increase and decrease rows and since it says that you should do R 1 in r1 of the chart, then yes, R 2 will be the r2 of the chart, R3, will be r3 of the chart and so on. When you get done with the chart, yes, start over again with R1. Then when you do 9 more rounds 'working even', you'll have done another repeat of the 10 rounds of the chart.
sue- knitting heretic