Crystal - Welcome to the forum!
The 5 stiches = 1" you saw on the label refer to what is called "guage". On the label there should also be a knitting needle size (i.e. US 8). What this is telling you that when you knit in stockinette stitch using that yarn and US 8 needles that you will end up with five stitches for each one inch of fabric you've knitted.
Gauge is used to determine if your knitting style will create the correct fabric or will it be too lose (meaning you'll need to change to a smaller needle size) or too tight (meaning you'll need to chage to a bigger needle size).
This page here
might be helpful in understanding gauge.
There are no idiotic questions here - ask and we'll try to help!