The gusset is made with simple yarnover
increases. Don't forget to knit the yarnovers through the back loop as with
the toe. You're increasing the number of stitches around your sock in
preparation to start the heel.
Once you've finished the gusset you are ready to turn the heel. Turning the heel means creating the small half-circle of stitches that makes the bottom of the sock extend to cover the heel and meet the heel flap. You turn the heel by using short rows. The Purl Bee offers a great tutorial here that takes the mystery out of this shaping technique, or check out the video at New Stitch a Day, and just wrap and turn! If this is your first time using short rows, you'll be excited to learn that you need not be intimidated, and as you use them you'll find that mastering them opens up a world of new pattern options!
One of the things that may seem strange if you haven't done this before is that you aren't knitting all the way across Needle 2 and Needle 3. Some stitches are left unknit on each side. As you follow the pattern, those stitches will be picked up. Also, during the process of turning the heel and knitting the heel flap, you are working only on Needle 2 and Needle 3. The stitches on Needle 1 will just wait until you are finished with the heel.
No matter what stage you're in, come join the conversation on Ravelry - we've been talking about color choices, calf increases, needle sizes, and more. As you can see from the pictures, we are all in different places in the project so come join us!