By looking at you he meant he welcomes you. He showed you that you need a spirit catcher and a pouch, but not from this area; his bag was from another part of the country. You have three stumbling blocks in your way that make you stop; those were the boulders. And you definitely are going to get your best powers in water canyons and gullies; the ally pointed out the gully to you. The rest of the scene was meant to help you locate the exact place to find him.