The phrase refers to a way of finishing a quilt once it had been sewn together, and is of course yet another example of the "trifles" that women associate themselves with in this story that the men see as evidence of their inferior and unimportant position in this world. Note their response to hearing the question of Mrs. Hale as to whether Minnie Wright was planning to quilt it or just knot it:
The sheriff threw up his hands.
"They wonder whether she was going to quilt it or just knot it!"
There was a laugh for the ways of women...
At the end of the story, this is something that is ironically refered to again, as the county attorrney speaks "facetiously" to Mrs. Peters and Mrs. Hale about the quilt and that Minnie Wright was going to "knot it." This is ironic for a number of reasons. Firstly, the men have used this as a symbol to show how incapable women are, whereas, unbeknownst to them, the women have just solved the crime whilst they are still ignorant. Secondly, I wonder whether there is an additional irony in the phrase "knot it." The women have managed to tie the loose ends of this crime, whereas the men have not. The phrase "knot it" therefore is very important to this story.