for now: just knit taht round. You will end up with the same amount of stitches as before. only you have created a line of hole and stitch and hole and stitch.
Then you keep working your mitten. Do not worry about the hem until the pattern tells you so.
Then you fold the work over in the place of this line. Fold the edge inside and make it sit right on the holes. The stitches between the holes stick out, the holes retreat.
in the end there will be a picot edge as said above. A wavy edge that looks nice and holds the fabric from curling over.
But for now: just work that row and go on.