Binding Off

"Binding off" is the term used to finish a piece, leaving a finished row. If you just stop, and remove your needle, you will be left with a row of "live" stitches that will soon ravel downward. So, in order to stop that, there is a special way the last row is treated.

Here is a verbal description of binding off. It assumes you are working on the "knit" side of a piece that is knitted in the stockinette stitch, because that is by far the most common place to do it.
Step 1: Knit 2 stitches.
Step 2: With the left needle, bring the first stitch over the second stitch and off the needle. Pull it up a little so it is loss on the needle.

Step 3: Knit the next stitch.

Repeat steps 2 and 3 until only one stitch remains on the needle.

Step 4: To lock the last stitch, cut the yarn (leaving a long end) and bring it up through the last stitch, pulling to tighten.

You can, of course, bind off on the "purl" side. To do this, just make purl stitches, instead of knit stitches.

TIP: Always bring up the stitch that is to be slipped into a larger loop than you think is necessary. This will ensure that the binding off is not too tight. Your goal is to have as much elasticity on the last row as you have throughout. Try pulling on the sides of the work and see if you can pull out the last row just as far.

Here are a couple of videos that should make it easier to understand:

http://video.google.com/videoplay?docid=1713550754206421652 (Continental style)

http://video.google.com/videoplay?docid=-3284006732963888317&hl=en (American/English style)