How do I knit this iPod hoodie?

[chickstix22]

I'm knitting an iPod hoodie, but I don't understand some of the directions. What does this mean?:

"Knit to 1st marker and place sleeve stitches on spare yarn, knit back section and place 2nd sleeve sts on yarn, finish row."

And also, what does it mean to pick up stitches?

[Ingrid]

At this point, you're separating the sleeve stitches from the body stitches. When you put the sleeve stitches on a spare piece of yarn, and start knitting in the round, you'll connect the front and back at the armpit. Later on, you go back