Help reading pattern....so confused :)

[lyricsmy2000]

I am attempting to create this fish hat

http://knitty.com/ISSUEwinter08/PATTfishy.php

under Shape Body it says work 4.75 inches decrease round 1 then work 2.5 inches decrease round 2, etc... Does this mean that I knit the stockinette for 4.75 inches but decrease it during the first round then when knitting the 2.5 inches knit the first round normal then during the second round of the 2.5 inches decrease and the 1.5 inches decrease when I get to the third round of that 1.5 inches? I hope this makes sense....