yes, steep means to simmer. you can make the broth as strong or weak as you like. but the more bones you use, the more medicinal value the broth will have. so exactly how much water is up to you. but for that small amount of bones, perhaps 1/3 to 1/2 gallon or so? of course as you cook it some of the water will avaporate. i like to use a lot of bones for my broth.