New Knitter trying to figure out pattern

The ‘Goodnight Moon’ pattern on Ravelry by Sarah Elizabeth Kellner tells me to cast on 36sts on 3 dpn.
the 1st line is: K10, WT, P20, WT, K10.
Questions:

  1. How many sts on each needle?
  2. How do I go from 36 to 40 stitches?
    The next line is: K1, M1R, K to last st in round, M1L, K1. and the one after that is: K11, WT, P22, WT, K11.
    How do I increase the stitches - or do I?
    Please help! Thank you!

Welcome!
Have you done short rows before? WT (wrap and turn) is one way to work them. It’ll add extra rows to one area of your knitting. You won’t be knitting all the way around all the sts but stopping before the end of round to work back (so no increases on this row). You can do this with 12sts per needle.
There are notes before the pattern that describe WT and also the increases M1R and M1L. See also this video for WT:

This is one of the cutest patterns I’ve seen in quite a while.http://www.ravelry.com/patterns/library/goodnight-moon

Hi - no, I haven’t - I saw this video & thank you for sending - so are you saying that there are no increases at all in the 1st line of instructions? I don’t have to have the number of stitches per needle per change in pattern? Are the M1L & M1R the increases?
Yeah, I really liked this pattern - I have 2 babies coming in my family & wanted to get this done (by Oct & Dec) & get them the book & knit/crochet a corresponding moon/star blanket. Any ideas on a cute pattern to match & what SOFT but very washable yarn I could use?
Thank you so much for answering!!!

There are no increases in row 1. You could put a stitch marker on the first stitch to mark the beginning of round. Then you’ll knit 10sts, wrap&turn so that you’re on the purl side, purl back on the same 10sts, past the marked stitch and purl 10 more stitches (20 purl sts), wrap&turn, knit 10sts which will bring you back to the marked stitch.
M1L and M1R in row 2 are the increases.
I’ve had my eye on this pattern for a blanket:
http://www.ravelry.com/patterns/library/bunny-hop-moon-and-stars-baby-blanket
You can check the projects on the right or look at the tabs above the pictures for yarn ideas. It looks like Caron’s Simply Soft has been used and that’s a reasonable acrylic that’s machine washable (a must for baby gifts).