You will see this instruction in sock knitting when working on the heel, or perhaps along the cast on or bind off edge of a scarf to add ruffles, or along the long edge to make a hooded scarf. There are other instances when you may need to pick up and knit, of course.
While you can pick up along any knitted edge, I find it easiest to use the crochet cast on if I will be picking up along the cast on edge, and slip the first stitch of each row if stitches are to be picked up along the sides. A standard knitted bind off will be just fine if you need to pick up along the cast off edge.
I recommend always inserting your needle under two strands, if possible, for more stability; you can just pick up under one strand of yarn though. Since the new yarn you are picking up is not anchored to anything, I always wind the tail end around one of my fingers to hold it in place until a few stitches have been knit. On the return row, the loop is going to be loose; simply pull to tighten it up and knit the tail along with the working yarn into the first couple of stitches to help keep it in place.
To pick up and knit, hold the yarn as you would when you normally make a knit stitch. Insert your right needle from front to back under the first two strands as near the edge as you can get, wrap the yarn around the needle as normal and pull it through. Continue picking up as many stitches as directed by the pattern.
To pick up and purl, make sure the yarn is in front of the work, and insert the needle as you normally would when purling, from back to front and wrap the yarn around the needle, and pull yarn through. Continue picking up as many stitches as directed by the pattern.
Written word is not often clear. Here are some pictures and a video. Hope this helps!
|This is my cast on edge. I used the crochet cast on which gives a clean edge that is easy to pick up. The highlighted loops are where you want to pick up.|
|A close up of the picked up stitch|
|Wrap the yarn as you normally would - this picture is a knit stitch. You would simply hold the yarn in front and make a purl stitch if the directions say to pick up and purl.|
|The yarn has been pulled through - the stitch has been picked up and knitted.|
|This is just a picture once all of the stitches have been picked up.|
|This is a picture of a picked up stitch along a non-slipped side of the fabric. It is much easier to pick up slipped stitches - a slipped stitch edge looks like the crochet cast on edge above.|