Don't feel so bad this can be tricky. What you need to do
is become familiar with the Combine, Subtract, Union and
Intersect feature commands.
The command you need is the subtract features. Generate the
bigger poly, generate the smaller poly. Then select both
polygons (you will need to get the pointer tool). and from
the edit menu select 'Subtract features".
Then just drag the smaller shape away, and you will see
that you have a hole. Undo to replace the shape. Easy.
If it doesn't work you have selected the shapes in the
wrong order and need to try agin.