craftgrrl | Help with crochet instructions

I wanted to make this for my niece who is turning 1 year old in March.
But I don't know how this pattern is worked. Where does it start from?Tthe collar?
It seems like the body is all one piece, but so far I have done 4 rows and where the pattern says: "Skip the next length of hdc's and hdc directly into the middle hdc of th hdc-inc of the previous row" that is telling me to basically make a loop thing stick up, right? That's what I have and it seems way too small to be a sleeve just yet.
Any help would be greatly appreciated!

http://crochetme.com/tags/baby-kimono-wrap-sweater