I am knitting the Kerrera Hoodie
at the moment. As I was knitting the "body" all in one piece (the Fronts and Back are knit in one giant piece)...at one point, you have to divide the Fronts from the Back for the upper body. At that point, the directions tell you to "put the underarm stitches on hold/on waste yarn". Later on, they will be joined to the sleeve underarm stitches by the 3 needle bind off method. Here are the underarm stitches, on hold on waste yarn. Your pattern called it 'a length of yarn'. Same thing as 'waste yarn'.
That same pattern asked me to also place the shoulder stitches 'on hold on waste yarn'...reserving them for the time when they will be joined together using the 3-needle bind off. Here is one of the shoulders on waste yarn. The purpose is to leave the stitches "live" "unworked". Later on, I will jam my knitting needle into the stitches again, and yank out the yellow waste yarn:
Just so you can get an idea of what a sweater cardigan looks like that is 'knit all in one giant piece'....here it is on the blocking table:
That "side seam" isn't really a seam. It's a rev st st (purl) that makes it look like a seam!