The nut on the spindle, like most nuts, has 6 sides. So "one flat" refers to turning the nut by 1/6 of a turn. "1/2 flat" is 1/12 of a turn.
Usually, you can't insert the cotter pin at exactly that point, so you turn the nut a little more until the holes line up. There are two holes in the spindle, though, so you don't have to turn it very far.
The point here is setting the running clearance for the wheel bearings. They need to have some clearance because the hub gets heated when you use the brakes and expands more than the spindle does. Without enough running clearance, the expansion would cause the bearings to become overloaded and fail.
PS, no dumb questions, only dumb mistakes. It's good you asked, since no doubt there are others that don't know but didn't ask.