Knit the 12 stitches and then exchange the needles in your two hands like you would at the end of a row of knitting, so that you are ready to work in the opposite direction. There will no doubt be stitches beyond those 12 but just leave them there and turn to work back in the other direction. Then they ask you to mark that row somehow. Right after you knit it, probably before you turn the work put a safety pin or a bit of yarn or something to mark the row you just created. I'm not sure why, but they probably refer back to this row later.
After you have turned the work like I said, then purl 7 stitches and then turn again. The stitches that were out beyond where you turned on that side you are to slip to a stitch holder (They make holders, or you can just transfer them to a length of yarn, or let them rest on an unused needle. I find a length of yarn the most out of the way stitch holder.)
You may be asked to work over those stitches between the two places you turned for a ways. That is often the case.