Translation:She is wearing a scarf instead of a hat.
A scarf could also be a babushka, or the type of thing you see the queen of england wearing in casual pictures, or a scarf that you normally wear around your neck worn around the head as well, or a chapel scarf, which catholic girls used to carry so they'd have something on their heads when they went into church. Your prejudice is showing.
@Klgregonis Literally so confused as to how this is a prejudiced question when literally all that @Ilya723583 is asking is if the subject in the sentence could be wearing a hijab. Your response was so well written until your last sentence which was 100% unnecessary and in itself kind of prejudiced, paradoxically enough.
i sted means instead - which can be broken down to in stead, which in old English did mean in place of. However, the larger mistake is the use of the word the in front of the. It just wouldn't be used in English. She is wearing a scarf in place of a hat is marginally acceptable, probably shouldn't be added as an acceptable option, though, because it's pretty rare.