Now I have tried this technique.
I have some observations:
Firstly, it looks better if the knitting is tight. Mine isn't.
Secondly, one has to be really careful to organize the yarns - the background yarn has to go over or under the pattern yarn, the same way all the time - I made some mistakes in that, sometimes the pattern yarn was over the background yarn and sometimes under... and it looks a bit messy.
Also, I had one red yarn and two blue yarns, doubled. The blue is thinner than the red, and should have been tripled.
Basically, what you do is to "embroider" the yarn in the knitting while you knit. It's not difficult.
I made mine in flat, but when you do it in round, you lift the pattern yarn on front of the knitting on the second row, yank it longer, knit and then tighten the yarn. You can have it a bit tighter than in stranded knitting. It's not as elastic, but looks really nice.