There are several ways. One is what Liz said. Others are the regular Magic Loop which I just learned recently myself, and is a good method. It uses a fairly long circular needle with a nice flexible cable section. The whole hat can be knit on the one needle, using the one technique.
There is also using a small circumference circular, a 16" one is most common. Any smaller than that is a pain in the whatever, for most people, but a few folks like them. Bigger than 16" is too long, although someone will probably disagree. LOL Then when you get to where you have decreased enough to need another technique, you can use dpns (hold on, you don't have to), switch to Magic Loop (or the modified version), or.... you can use another circular of the same size (I mean like a #8 needle or whatever) and any length.
To do two circulars I begin a new round with the new needle and knit about half of the stitches onto it, then move to the original needle and use it for the second half. The thing to remember with the technique is to always work the stitches off the needle with the same needle they are sitting on. Don't work from one needle to the other.
I think there are videos on this site that demonstrate each of these techniques. If not, try a Google search, or YouTube.