Jen, I read the pattern over & over & it seems like it would make more sense if you join the chain round in a circle & then work your rows from there...though it doesn't say that anywhere. I'm all the time tweaking patterns to my liking...like I hate how you can see where your rows begin when working around & back, so I'll usually just work round & round instead.
Another cute way to make an earflap hat is to make your standard beanie & then attach triangle granny squares for the flaps, edge the whole thing & attach braided ties. K