I got this hat for my then 12-month-old daughter in size 18 month.  It fit her great then - just roll up the hem a bit more.  She's now 18 months, and the hat still fits just fine, with much more room to go.  The wonderful thing about the fit is that the material is very stretchy so can accomodate a growing head without squeezing it.  At the same time, the generous hem provides a great range of the depth, so that the hat is still deep enough to last for many months.  I would not be surprised if it still fits next fall, without the rolled up hem.

The material is light, so it's not a cold weather hat, but is nice for cooler days/evenings when no hat is too cool and a regular hat is too warm.  We also use it around the house after a bath if it's a little chilly, to keep her wet head warm.  And I put it on her for the night when she has a cold, to make sure she's not cool.

Update:
Three years later and we still use the hat sometimes!  My daughter really loves it, it's soft and pretty.  If you undo the fold, it becomes much larger and was fitting my daughter just fine for a while, definitely until 3.5.  It still fits - somewhat, the width is ok, but it doesn't cover her ears.  We've been using the hat now and then, to wear around the house after a bath if the house is not too warm.  And sometimes - just because!

My daughter loves this hat, too, and wants to wear it all the time.  She figured out how to put it on a couple of months ago, so now wears it at the house whenever she feel like it.  Very cute! :-)