quilterguy27 - I just followed the instructions that I received for the template! I really don't know why the one corner is 1".
I tested this out by making the template, then drew a number of 5" squares (maybe 3 rows of 3) on plain paper, then traced the template on my grid and cut them out and placed them together in rows. It worked! If that 1" really bugs you, you could try this before cutting any fabric (use 3/4" on all corners)