Help me to understand this /Users/username/sites/website1
The folder /Users usually is in the root of your boot volume. The folder /Users usually contains all user folders of the (non-system) accounts configured in OS X and a Shared folder. The name of a user folder usually is identical with the short name of the user account.

To see/access /Users either open your boot volume or bring Finder to the foreground and in the menubar navigate to Go To -> Go To Folder..., enter / and hit the OK button (then you will see the folder Users) or enter /Users and hit the OK button (then you will see the content of the folder Users).

In /Users/username/sites/website1 username is just a place holder for your (OS X) short name. So in /Users open the folder with your OS X short name (your user or home folder is also indicated by its icon: a little house) and you are in your user folder.

To immediately jump into your user folder use the shortcut shiftcmdH in the Finder.