This pattern is to make a baby bonnet. It includes directions to make it with or without the scalloped edge. It works up quickly and the pattern includes sizes 0-3 months, 3-6 months, 6-12 months, and 1-3 years.
The exact yarn in the title picture is Sensations Angel Hair Yarn. It has since become not as readily available, but the closest substitute would be Isager Eco Soft (crocheting two strands together). The other bonnet pictured is made with Lion Brand Homespun Yarn.