To confuse things more, here's the reply I got when I wrote to Wenlan's website:
The ideal way to do this kind of pocket is that when you knit up the where the pocket opening is, put down the sweater and cast on 7 stitches and continue making the pocket bag. In this sweater, there are 2 pockets so you need to do 2 pcs of the pocket bag. If you do not have another set of needle, you can push all the sweater body stitiches to the tube part of the needle and use the needle to make pocket and then put the pocket on holder.
When you finish both pocket bags, continue the body knitting but when you knit up to where the pocket opening are, instead of knit the original opening on the body, continue your knitting on the pocket bag but put the pocket opening on holder. When you finish the entire sweater, you come back to take care of the pocket by seam the pocket bag into the garment (just like when you seam a regular side seam) and picking up stitches from the on hold pocket opening and start ribbing and then bind off the rib opening.
I had already decided to skip the pockets, knit the sweater and then sew on pocket fronts with extra yarn. Maybe I will try the pockets again if I knit another one.