Hi Cattitude, I'm a new member here, hope you won't mind my chiming in. I looked at the quilt directions and I think I see what is confusing you. They have you sew a square to the end of a strip, stitching a diagonal line. Next they want you to turn over the corner of the square and press, but the wording says this:
Sew on marked line. Trim excess, leaving 1⁄4" seam allowances. Press open to make Unit 1. The unit still should be 2-1⁄2 ×10-1⁄2" including seam allowances.