The decreasing on the first round could be to keep the cast-on edge from being too tight, seeing as how it has to get down over your shoulders. Or they just want it to flare out a little. Kind of a trust-the-pattern sort of moment. But you are correct, that is unusual.
P = purl. In the ribbing stitch pattern directions, you can see it's K1, P3 for Round 1. It's just asking you to work it as * K1, P2tog, P1, K1, P3*, repeating the stitches between the * to the end of that round. Then going forward, you'd have to work the Rnd 1 of the pattern stitch as K1, P2, K1, P3 until the next decrease round, which would be K1, P2, K1, P2tog, P1.