No, it means inserting your needle into the stitch below the one on the needle as if it were the next stitch. It doens't make a dropped stitch, but two strands of yarn over the stitch.
An easy way to do this pattern is to do the first row as k1,p1. On all the other rows, k1, k1b all the way across, ending with k1. You don't have to purl at all and because of the k1b, it comes out like a purled rib on the other side.
Try it on scrap yarn; it makes a very cool stitch.