I would lay the right side of the collar inside the sweater up against the ws of the body. This way your seam will end up under the collar as it's folded back.
As for the 'both thicknesses' thing? I'm not positive what they mean. Sometimes they'll be further directions in another section of the magazine, but I suspect that you work your yarn through all the loops on the edges of the collar and the body.
"Trust the pattern!"
Time flies like an arrow, but fruit flies like a banana.
Hop aboard while we follow the cloud-covered van of knitting harmony, man!! Woooo!! --Hedgehog
IngridKH on Ravelry