A YO is a yarn over increase. It's essentially an extra wrap of the yarn around the needle. If you're doing a YO before a knit stitch, bring the yarn to the front, and as you knit the next stitch, the yo will be created. If it's before a purl, you bring the yarn over the needle and to the front again before you purl the next stitch.
It creates an eyelet, and is often accompanied by a knit 2 together to compensate for the increase.
If you check out YO in the Glossary section, you'll find video.