CO1 is indeed cast on one. You can do a slip knot to get that one stitch on the needle. This is the beginning of one of the two earflaps. The next steps increase the sts by knit, purl, knit into that one st (knit into the st just means knit that stitch). In the case of kpk into the stitch, you insert your needle into the st and knit it but don't drop it off the left needle, bring the yarn between the needles and purl that same st but don't drop it off the left needle, bring the yarn between the needles to the back and knit into that same st, this time dropping it off the needle. Now you have 3 sts.
Give it a try, it's much stranger to think about than to do.