Basically you are going to create 5 sts where there was 1. To do this, you will insert the needle through the first st, wrap the yarn, pull it through, but then not slip the left st off the left needle; leave it there. You'll have a new st on the right needle; take that st and put it onto the left needle. (See Note) You now have 2 sts where there was 1. Now repeat this 3 more times; you'll have 5 sts where there was 1.
bind off 4 sts from the left needle. Now the fifth (original) st will be on the right needle.
And that's it! Let me know if you need any further help. (Very cute hat!)
NOTE: This is actually a method of casting on- you can find the video of it on this site. It's called "knitting-on". Scroll down on the cast-on video page and you'll see it.