They are having you decrease IN pattern.
You are at the 2 sts before the previous rows ssk right? So now you will "ssk, k2tog, yo, k1" then knit to the next 2 sts before the row belows ssk and do the same thing all around. Now, when you have decreased to where you don't have 2 plain sts before the next ssk below, you are to leave off the "k1" and continue with "ssk, k2tog, yo". Then you'll get down to where you don't have enough sts to complete that so you will then switch to "ssk, k2tog" until you have four sts left. You'll cut the yarn leaving a long tail and thread the tail through the remaining four stitches (run it through twice always helps to "lock" it) pull it nice n snug n fasten off the end on the inside of the hat so that it doesn't come undone. Poof!! yer done!!
Hope that helps ya!!