Could somebody please explain to me the bottom line here. I don't understand how dS becomes r dtheta. I thought dS was supposed to be an outward pointing normal which is surely just r? I'm guessing theres something obvious im missing here.

Could somebody please explain to me the bottom line here. I don't understand how dS becomes r dtheta. I thought dS was supposed to be an outward pointing normal which is surely just r? I'm guessing theres something obvious im missing here.

$dS$ is an infinitesimal surface element. In this case it pertains to the surface of the cylinder which has been reduced to a circle. In particular it points in the $\hat{r}$ direction but its magnitude must represent infinitesimal surface area. In this case its magnitude is $rd\theta$ which is exactly the infinitesimal arc length of a circle with radius $r$.