If you refer to the main photo, you will see the old method in green, and the Magic Ring in blue.
(Notice there's no hole in the middle of the Magic Ring).
To make the Magic Ring continue on to the next step.
For more crochet instructions, how to read patterns, choose tools & materials, and make a variety of stitches, read my Instructable on How to Crochet: Amigurumi Basics
Step 1: Making The Magic Ring: Steps 1 - 4
Step 1: Begin by wrapping the yarn around your fingers, like shown.
Step 2: Put your crochet hook through the center of the loops, like shown.
Step 3: Pull the yarn (that comes from the ball) through the center of the loops, like shown.
Step 4: Hook the yarn (that comes from the ball), like shown, and pull the yarn through the loop on the crochet hook.
The start of the Magic Ring should now look like Photo 2.
Proceed to the next step.