It's using the crochet type of slip st, but I'll try to explain it, it' a bit like picking up sts and binding off at the same time.
Put the sleeve edges together, RS in, WS facing you, and the final st from the sleeve BO on the right needle. Insert the needle through both edge sts, wrap the yarn and bring it through. Pass the first st over the one you just picked up. Pick up the next st and repeat. You want to pick up in a ratio of 3 sts for every 4 along the sleeve edge so the seam isn't too tight or too 'gappy'.
sue- knitting heretic
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