Help with pattern instructions

I am a beginner at knitting and have decided to make a Christmas stocking. I am working with circular knitting needles.

The area in which I cannot figure out is the following:

**Work first 3 rnds of Pattern 1 (I believe this is telling me to knit the first three rows according to the pattern)

**Next rnd, k 2 sts as set, k2tog, yo, k to 4sts before end of rnd, you k2tog,then k rem 2 sts. (I am struggling because I do not understand what it means to k 2 sts as set)

I would appreciate any help!!

‘As set’ means the pattern stitch that was ‘set up’ or established during the first 3 rounds. Work 2 sts in that pattern whatever it is - stockinette, ribbing, seed, etc.