this one confused me too when I first saw it.
Your pattern should look something like this:
row 1: k across
row 2: k1, *yo, k1, repeat from *
row 3: k1, *drop yo, k1, repeat from *
Just to be clear, a "yo" is a yarn over. So, basically, on that 2nd row after each knit stitch, you wrap the yarn around the needle once.
On the third row, you're going to knit one, and then just take that yo (yarn-over) from the row before and take it off the needle. -- what this does is give a long stitch on this row -- it looks really cool on the scarf I did.