How do I add a custom field in checkout?

Hi How can create a custom field such as special instructions text area?

Do I just edit the custom_fields.php page?

Where do i go about?

You need to go in the menu Display->Custom fields and create a new custom field of the table order. Make sure the display on front end option is turned on and it will be displayed automatically.
Custom order fields are only available in the Business edition.

So you mean for the free version of hikashop all custom fields can only be added to the address form right?

Indeed.