Instructions for making for making a French Knot:
1. Bring the thread out at the required position, hold the thread down where it emerges with the left thumb and encircle the thread twice with the needle (see A).
2. Still holding the thread firmly with your thumb, twist the needle back to the starting point and insert it close to where the thread first emerged (not in the exact place or it will simply pull back through).
3. Pull the needle through to the back, leaving a small knot on the surface, as shown, or pass on to the position of the next stitch as at B.
There is also an extremely helpful video tutorial at Needle N' Thread demonstrating how to make the French Knot. Watching the stitch in action will definitely help in making written instructions comprehensible.
The image above comes from the flickr photostream of Stephanie also known for her great blog, ruby-crowned kinglette. It is a beautiful way to highlight the French Knot in a simple and clean design.
Flickr member Tanya, created this adorable knotted sheep. It is a prime example of adding a three dimensional element. Plus you can pet this fuzzy guy!
So grab a piece of scrap fabric and practice the French Knot. Once you get the hang of it, you will be adding it to all of your embroidered designs!