The idea is pretty simple: You only have so much room in your day, so when making out your to-do list you should have a similar limitation in the amount of space you have available.
The Post-It pictured above is exactly how you shouldn't take this advice. Section the Post-It into four squares, put your most important task in the top left, and then use the other three for things you'd like to accomplish today. Keep the Post-It with you and do what you wrote. This isn't necessarily a replacement for the endless to-do list many of us have, but it's the little sheet that helps us tackle the major stuff we have to get done day-to-day.
If It Won't Fit On A Post-It, It Won't Fit In Your Day [The 99 Percent]