Right??!?!
The package should tell you what size drill bit to use. If not, read the reviews/questions. And you can probably figure it out by looking, honestly.
I suggest using a bead of silicone to seal around the nipples once you get them attached to the bucket.
They figured it out pretty much immediately. I just "pecked" it a few times with my fingers, and they got curious. Once one figured it out, they all did.
I bought a bucket with a lid at TSC (it's not a 5 gallon bucket, though that would work, too). I got the nipples off Amazon. I just have one...
I really like nipple waterers. They stay remarkably clean. I use the vertical ones in my run. I have buckets, too, because I have ducks, but the waterer with the nipples is pristine! HIGHLY recommend.
As for feeders, I hang mine from the roof of the run. The one I keep in the coop is raised up...