Here are the links to the videos that taught me how, they are very clear and easy to understand.
Fair Isle Crochet Tutorial #1: How to Change Color
Fair Isle Crochet Tutorial #2: How to Catch Your Float
Fair Isle Crochet Tutorial #3: How to do a Clean Color Change In The Round
To make the hot water bottle I crocheted ribbing, connected that into a loop, crocheted along the top of that until my desired length and then sewed the top closed.
To follow the graph just count each square as one single crochet.