Step 2 is easy, but first I have to clarify some questions.
We will be using the same size needles for knitting the whole mitten.
I also forgot to mention that due to the shaping of this gusset we will be making a left and a right mitten.
We are working on the LEFT mitten for now.
So on to Step 2
Knit 4 rows in Stockinette stitch, but INCREASE by 1 st in the first row.
you will now have 33 sts on the needle.
Update for "kittie" email@example.com"
Kittie asks about my preferred method of increasing. I don't have a preferred method - I use whatever one works with the pattern.
In this instance for increasing by one, I knit 16 sts and then lifted the stitch from the bottom of the next stitch and knit into that and then knit the top stitch.
Here is an example on Maggie's Rags Site.
Thanks for asking this question Kittie!
I increased in the center. This is the section that one may knit more rows if they like longer mittens but since these are for children we will keep it at 4 rows.
See I told you Step 2 was easy!
Tomorrow Step 3.