I assume that all the sh are really st. It means don't complete the stitch using the last loop on the hook but use that loop in the next part "dc in next ch sp, insert hook under next ch sp, pull up thread, dc in next ch sp, YO, draw through all 4 loops on hook]" I hope that clears it up for you. By the way I would love to see the finished doily.

I am in the process of doing a doily myself and am changing the pattern because of my thread choice.