A colourwork chart is a grid where every square is one stitch and its colour or symbol says which yarn to knit it with. The photo-to-chart tool on this site makes charts like this from a picture.
Direction
When knitting in the round you are always looking at the right side, so every round is read the same way: right to left, starting with the bottom row of the chart and working up. The chart rows are numbered from the bottom for this reason. If you knit flat, right-side rows read right to left and wrong-side rows read left to right, and on wrong-side rows you purl.
Two colours per round
Stranded knitting works with two colours in a round. The colour not in use is carried loosely across the back, making a float. The printed chart only makes sense if the floats are loose enough: spread the stitches out on the right needle before you bring the new colour across. Tight floats pull the fabric in and the motif will be narrower than the chart size says.
Long floats
A float longer than about five stitches catches on fingers and pulls. The chart tool counts runs longer than five for you. Where a run is long, twist the two yarns together once in the middle of the run on the back of the work (catching the float). It does not show on the front.
Stitch shape
Knit stitches are wider than they are tall, roughly 5 stitches to 7 rows per inch in a DK yarn. A chart drawn on square graph paper knits up squashed. Charts made here use your stitch and row gauge so the picture on the chart matches the picture on the hat.
Yarn dominance
The colour carried below the other on the back comes out very slightly larger on the front. Keep the same colour in the same position for the whole project, usually the pattern colour below and the background above, so the motif looks even.