I know how to knit with knitting needles only so I can't help you. I do not know how to do the weaving with the little circle and pegs. That's not really knitting to my mind.

If you want to be able to make anything, just get some needles and yarn. There are basically 2 knitting stitches, one called KNIT and the other called PURL. It is not all that difficult, though it feels awkward at first and you have to practice to make even stitches.

I don't have one of these so I'm not sure this will help - but it seems to me if it has loops of yarn around the pegs then you would work them off like you do on one of those potholder looms.

I went on a Google hunt and came up with this page, about half way down are instructions for binding off. :0)

Hope that helps.

Here is a link that might be useful: knifty knitter link