my first yeast starter. instructions confusing.

You normally only want to make a starter for liquid yeast. The reason is that quality dry yeast (like S05) are packaged so that there are enough cells to ferment almost any 5 gallon batch, plus they have certain reserves due to the way they are packaged. The manufacturer does suggest rehydrating, though.

Here's a blurb from Jamil Zainasheff on dry yeast and starters: "Another case where you generally don't want to make a starter is with dry yeast. It is usually cheaper and easier to just buy more dry yeast than it would be to make a starter large enough for most dry yeast packs. Many experts suggest that placing dry yeasts in a starter would just deplete the reserves that the yeast manufacturer worked so hard to build into their product. For dry yeasts, just do a proper rehydration in tap water, do not make a starter."

For liquid yeast, you almost always want to do a starter.

Great info from mrmalty.com on starters here: http://www.mrmalty.com/starter_faq.php