Inc is 'increase' which is to add another stitch. It says to inc in and stitch which usually means to knit in the front and back of the st (also called kfb). To do that you knit into the st and leave it on the L needle, then knit into the back leg of the same stitch. There's a video for it on the Increases page.
So for the row you k1, k2tog, k5, kfb, k1 and you'll have 10 sts, the same as you started with. The inc offsets the k2tog dec. The same thing happens on the next row -
Row 2: P1, Inc P-wise into next st, P5, P2tog, P1 - 10 sts."
P1, pfb (purl into the front and back of the next st) p5, p2tog, p1 and you still have 10 sts. the '- 10 sts' is just for information to show that you still have the same number of stitches.