To make this cuddly, floppy bunny, you need to be able to:
Knit in the round, increase, decrease, and work short rows.
As this pattern is for a toy, there really is no right or wrong gauge. I usually knit it with bulky weight yarn for a bunny that is about 13 inches tall, but any weight will do -- just remember to use needles that are a couple of sizes smaller than those called for by the yarn you’ve chosen. This will make a nice, tight fabric, and keep your stuffing from peeking through.