This step in making the rosette shows a line up of stitches on the needle itself, similar to those in the first row of stitches cast on for knitting or in needle tatting. (Here the similarities among many of the fiber arts are clear.)
What's this F1, F2 and M1-M2 connection stuff you wonder? Well, it is to explain how many and which stitch loops from the previous row are picked up, when needlebinding rows. It can also be used to describe decreases. Photos of [yet to be determined stitch and] connection types by Elsa, posted 2011-10-05 in her blog The Medieval Elsa. Please see link for more info and photos!
NALBINDING SOCKS: METHODS OF CONSTRUCTION, tutorial including starting tips, and 5 different approaches to making socks with heels, eg Heel Type A to E, by Shelagh Lewins. Please see link for more info and illustrations!