yo stands for Yarn Over and it is an increase.
When you are doing your stitches in knit, the yarn is in the back, right? When you yo as you are doing knit, you put the yarn to the front, between the needles as if you are going to purl. When you knit the next stitch, the yarn gets wrapped around the needle and creates an extra stitch.
If the yo occurs on a purl row, you put the yarn in back and then purl the next stitch.