Okay, I was right. You do a border first on rows 1-7. Then you start the cable pattern. There are 5 rows in the cable pattern so they numbered them 1-5. Notice the decrease rounds are numbered the same way. That does make it confusing when you read it if you're not used to reading patterns.
So just start following the pattern and you'll start to see how it works.
This is the pattern for the cable column only on the hat. It'll be inserted into the hat itself in 3 places. As Jan said, just follow the cast on and place this pattern between the two P2 sts as directed. It's really a very neat use of cables and decreases. Good luck with it!
Maybe I am still confused because I am knitting this flat with single points instead of on dp needles, I have done the first 6 rows, but am still confused on inserting the cable pattern do I completely knit all my stiches three times for the k8 1-3, then c4f all the way across, then k8 three rows again?
As with most patterns, the special stitch patterns are given before the actual start of the pattern. So you CO 66 stitches and work 6 rows, then on the next one - k10, p2, and do row 1 of the cable pattern over the next 8 stitches which is to knit them, p2, and repeat that 2 more times. The next 2 rows work the stitches how they look on the needle - knit what look like knit stitches, purl what look like purl stitches. The following row, instead of knit 8 over the cable stitches you'll make the cable itself which is to put 4 sts on the cable needle and let it flop to the front, knit 4 sts off the L needle, then knit 4 from the cable needle.
So it works out to:
Round 7 (k10,p2,k8,p2)3times
where the underlined part is round 1 of the cable pattern. Rounds 8 and 9 are exactly the same.
Round 10 (k10, p2, C4F, p2) 3 times
Rounds 11-17 are the same as round 7 and round 18 is the same as round 10.