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Lace knitting is a knitted fabric characterized by a row of plain knitting with an alternate row of knitted holes or yarn overs. The holes are considered as âstableâ and strategically placed or purposely done in order to have an aesthetic appeal for the design.
It's called the Little Shell Stitch, and I first found it in the Harmony Guide To Knitting Stitches, Volume 2 (the older Harmony guides), on page 54. The Little Shell lace socks and the American Girl nightgown/dress pictured above both show this stitch.