Circular Needle Questions...Please Help!

I am getting ready to start knitting with circular needles and I had a few questions before tackling it:

  1. Some baby blanket patterns call for circular needles. I thought circular needles only made tube-like items like hats and bags? How is it possible to use circular needles to make a blanket?

  2. I’m going to begin with the “Chinese Charm Bag” from the Stitch 'N Bitch book. The pattern begins with the following: CO 80 sts. K 1 row, then join ends to form a circle. How do you knit 1 row and THEN begin knitting in the round?

Maybe I’m just missing something here…I think I’m just over-complicating things here, though. Thanks so much to whoever can help me!!