Don't be afraid to ask questions! Learning knitting patterns is like learning a new language.
Answer to your first question:
Yes, in terms of a hat, it would be height. You will knit until you have 5" of fabric. As you knit, this will become clearer.
Answer to your second question:
Yep. When you decrease or increase in a pattern, it will generally tell you how many stitches you will have at the end of that row or round just to help you keep track.
Answer to your third question:
When you seam up knitting, you will use a yarn needle and typically a strand of the yarn you knit with. (If the yarn is really bulky, I will usually split the plies and use just some of them, or find matching thinner yarn or embroidery floss. Otherwise the seam will be really bulky.) I really recommend you get some Chibis.The bent tip actually makes seaming knitted fabric easier.
There are several ways to do seaming in knitting, but I personally prefer doing what's called the mattress stitch. You actually do this with the public side of the knitting facing you, not the inside. It results in a pretty much invisible seam.
There is a video here on knitting help on the knitting tips video page:
This is a good article about seaming:
Always feel free to ask questions. They aren't ridiculous. What would be ridiculous would be if you spent hours doing something incorrectly because you didn't ask!