it should be pointed out that there are different ways to achieve what you are asking.
The instructions you are reading are how you would redirect the web traffic using an A-record. Other services (such as email) would remain at 1&1. This might also be used when one or more sub-domain of a domain has different hosting.
Another way to handle the situation is to tell the registrar (1&1) that the DNS for this domain is handled elsewhere, and this is done by telling 1&1 that the NAMERSERVERS for this domain are Dreamhost's. (see the previous post Scott linked above). Exercising this option moves all services (except domain name renewal) surrounding the domain to dreamhost. It also makes the dreamhost control panel able to generate needed records automatically.
It should also be noted that either option you take there will NOT bring instant joy. DNS propagation takes time. This is not under the control of dreamhost, 1&1 or any specific provider. In general, DNS propagation occurs within 12-24 hours across the USA, however it can take up to 3-days for the change to be seen world-wide.