From what I remember about the chapter:
Ilse's notebook documents her experiences after the loss of her squad and horse somewhere outside the wall. What it concludes is that some titans do have the ability to speak and recognize faces. It lets you know that they aren't entirely mindless. Hange later find this journal, and her mind is completely blown by what Ilse experienced. It lets her know, which she later reveals to Captain Levi, that the titans, including the ones they've been killing were once human.
How Ymir ties into it requires that you piece together the puzzle. If you don't want to do that, read the following spoiler:
A lot of debate used to happen about Ymir always being a titan, who later ate a titan shifter to gain her humanity. Once we learn that titans used to be human, this went away. So the titan who mistakes Ilse for Ymir was also human at one point who became a titan around the same time Ymir did, and this is how it came to recognize Ilse as Ymir. We still don't really know exactly how these humans were inflicted with becoming a titan, but we do know that the royal family was involved.
At any rate, the answers you're seeking have all been disclosed at the current point in the manga.
- The General has spoken.
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