Please help with reading a chart for a lace pattern

I am trying a lace pattern chart for the first time and I’m really confused. The pattern is Backyard Leaves from the Interweave Knits Holiday Gifts Special Issue (Holiday 2006). The set up row has 10 stitches. The next row (row 1) has 12 stitches (2 extra stitches at the beginning of the row). How do I get those 2 extra stitches? Do I cast on 2 more stitches and then start the row? Also, that row (row 1) has 2 YO’s in the middle of the row. Doesn’t that add stitches. How would that match up with row 2, which has only 12 stitches? Thanks for any help!

A chart pattern shows the results of your knitting–not how many you start with. So you will just work row 2 as it’s written, and those two yo’s will give you the two extra stitches that you need.

When you see the + signs on row 4, you will need to cast on 5 more stitches, though.