For every stitch you wrap the yarn around the needle 2 extra times, these are the ones you drop on the next row. Then you work the same 4 sts 4 times to still end up with 4 sts on your needle. Have you tried it out with some leftover yarn to see how it works? Often things don't make sense in a pattern until you have the yarn and needles in hand and can work it out that way. Just try doing it step by step.
sue- knitting heretic