how do I apply numbers such as 1 to heading 1 and 1.1 to heading 2 etc?

There are two ways to do this: The right way, and the wrong way :-)

The right way is to click in the first Heading 1 in the document and then follow the instructions Shauna Kelly gives here:

http://www.shaunakelly.com/word/numbering/outlinenumbering.html

Shauna has never seen Mac Word, but Word 2011 behaves very like Word 2007, so you'll soon figure it out.

Basically:

1.  Go to Format>Style>Modify>Format>Numbering...

Notice I said go in through "Format>Style..."?  This is the right way.  There are two other ways of getting to a place that looks exactly the same, but it is NOT the same place, and that is the WRONG way :-)  The difference is that one creates numbering that works, lasts, and copies.  The other way creates numbering that falls to bits every time you take your eye off it.  Don't get caught...

2.  In the Bullets and Numbering dialog you arrived at in Step 1, click "Outline Numbering" then click a sample that shows "Heading 1, Heading 2, Heading 3" in its picture.  Choose the one that is closest to the format you want.

If you have done it right, that's all you have to do.  You have now defined your required numbering as part of your Heading 1 through Heading 9 set of styles.  The numbering format is already set up and will work unless someone has changed it.

You can go on through to click the Customise button then make all sorts of detailed changes to the numbering format.  The critical thing is to define it into the styles named "Heading 1" through "Heading 9".  Those styles have special properties that prevent numbering going wrong.  It is also important to access Bullets and Numbering the way I said in Step 1.  If you don't the numbering breaks easily and is very difficult to fix.

Come back if you need more detail!