Right how do we work it? First start at the right by bringing your needle up at 1 and lay your thread on top of the fabric to the left holding it down with the left thumb. If it helps to keep your line straight you can always draw a guide line. Next moving a short distance along the line pick up a small stitch between 1 and 2 and under the thread. Make sure the thread is looped under the needle as in the picture and then pull the thread through to form a knot. Continue working along the line in the same way.
You can use different thread thicknesses or change the angle of the knot to give different effects. Coral stitch can be used on straight or curved lines as well as being used as a textured filling stitch. When using as a filling stitch place the knots into spaces between the knots of the previous row as shown below.