First of all, the layout shown is 3 x 4, not 4 x 6, before borders. So the measurements given including the borders make sense.
If each block is 12" finished, then the larger rail blocks are made of strips cut 2 1/2" wide (3 strips finishing 2" each makes 6", and there are two of these squares in the 12" finished width of the block.)
The smaller rail blocks have 4 squares in 12", so each smaller square is 3" finished. If each of these 3" squares is made of two equal width strips, they finish 1 1/2" and are cut 2" wide. (The picture looks like they might not be equal width, but I would make them that way. If the smaller rail blocks are also three strips instead of two, then each strip would be cut 1 1/2", to finish 1".)
(This is the way I think it through -- hope it helps you learn how to do it yourself!)