Do just what it says. Knit the sts on the first needle, on the next one, knit 2, drop your working yarn and k4 with the scrap yarn. Then you put them back on the left needle and knit them with the working yarn and knit the rest of the sts. The 4 sts will form the base of the thumb and when you're finished, you pick out the scrap yarn and put the sts on needles (there will be 8 from the upper and lower part of the sts), pick up a couple more and knit the thumb.
sue- knitting heretic