Each clue is an anagram of the answer with one letter changed. Example: Clue is BEANS (1) / Answer is ANISE. (Swap B for I.) The number of the letter in the clue to be swapped is given. All answers are one word but might be plural or proper names.
Thanks for working it out, Jon. The hardest part of constructing these is to get the 5 x 5 grid to include only one-word answers, followed by writing the instructions in under 500 words.
I spent the first minute trying to solve it without considering the number hints, but gave up.
For making the grids, have you considering using a custom word list with a program like Qxw to ensure that all entries are single words that are "one letter away" from other single words?