A good question. And quite a logical response!
The 38 heel stitches are on 2 needles, worked back and forth from one needle to the other. The rest of the sock just sorta hangs there for now, right?
Okay. So when it says to turn your work so the wrong side is facing you... it means turn the heel stitches you've been working on so that the wrong/inside side of just those stitches are facing you. Your yarn should be at the beginning of the row, ready to start with the purling part of your pattern.
The heel is made up of three steps. First is that you put the heel stitches onto one needle and the other stitches that are non-heel either go onto a holder like you did or can be just left on 2 needles. Either way, they go dormant for a while. Nighty-night.
You will work the heel stitches in the proper pattern until it's the right length. This could be compared to like knitting a tiny scarf in the heel part of your sock. Once you've reached the right length, you start to "turn" the heel.
Turning the heel is where you make the sock's foot part go at a right angle to your ankle portion. This is done by working [knitting/purling] very short rows that gradually lengthen as you work the turning pattern. Eventually you'll find that all stitches on your heel needles have been used up. On to part three.
Now you take either a needle or a small crochet hook and pick up a certain number of stitches along the side of your tiny "scarf" that you knitted in part one.
Then you'll wake up those dormant stitches and work across them.
Then you'll be at the bottom of the other side of your tiny "scarf" - and you'll again pick up the same number of stitches along this side of the scarf, ending at the "turning of the heel" stitches.
Ta-Da!!!! You've done your heel!! Now all you have to do is decrease like the directions say till you have once again the proper number of stitches to fit around your tender l'il footsie.
And you will absolutely not believe how very, very comfortable those hand-knitted socks feel.