K Robin, welcome to the party!!!
Ummm, I went and looked at the pattern in question and I can see where you are getting confused there. You are on row 2, k1 (the border stitch) and then knitting one into the first k2 tog then you have your double yarn over, so you are basically knitting the 1st loop over and then purling the second and then knitting into the 2nd k2tog and then repeating from the k in the k2tog. (hope I am making sense here).
It might look something like this:
(4) VVV (V VU V)~VVV
(3) VVV (^ oo ^)~VVV
(2) V (V VU VV VU V)~V
(1) V (^ oo^ ^oo^)~V
V= knit, U= purl, ^= knit 2 together, o = yarn over, ~ means to continue your repeat till you reach then end ( at least in this little example)
I tried to illustrate it so that you could see the relationship between the right side row (decrease, yo's) and the wrong side (the knit purl row)
Now on rows 3 and 4 you are moving the eyelet over to sit in between the eyelets of the first two rounds (like bricks) and repeating the same process as before except now you have moved the hole over. The holes are supposed to be double the normal size.
I hope that this helps to get a picture in your mind (that's what usually helps me the most is to visualize each row, not the whole garment or piece).