Once you have all the 120 correct words in what I call phase one, you then establish the 14 one-word "definition" words, using the first letter of each of of the 120 words in phase one, starting at 1A and working through to 40C.
Beware.......the very first "definition" word in phase two is very obscure, but from then on it's fairly straight forward.
If all your answers in phase one are correct, you will end up with a list of 14 "definition" words after phase two.
Phase three: You then have to find a five-letter word from each of the 14 "definition" words but once you have established the first five letter word, you can only proceed down the list by changing one letter each time.
It's referred to as a 5 out of 5 (from the setter's example), but for us it's actually 14 out of 14.
All I can say is once you have the correct first five letter word in phase three, and you progress down the list, changing only one letter at a time, you might suspect what the 14th and final five letter word will turn out to be.
Sorry it's a bit long winded, but it is a bit tricky to fully understand and it was about 5 days before the penny dropped for me.