This exercise is from the Core Skills section on Muting.

In this exercise we shall play a typical funk chord and periodically use the thumb to mute the Low E string.

Where you place your thumb exactly is down to you, as it's not used to actually play notes. As long as it is just resting on the strings and stopping them from sounding out when struck. When strumming, try not to strike the muted low strings anyway, but having your thumb in place will mean that even if you do, those strings will be muted.

Use your little finger in the same way as your thumb. As it is playing / muting the G (8th fret on B string) keep it at a shallow angle so that it constantly rests lightly on the high open E string to mute it. Again, it doesn't matter exactly where on the E string that it touches - as long as it is muted.

Listen to the strumming rhythm until you are familiar with it. Pay attention to the strumming hand dots to get the rhythm if you are unsure - but it is mostly straightforward down / up strokes, so shouldn't be too hard. Although there is a lot of muting, occasionally apply pressure to your fingers on the frets to get those funky chord stabs.

Keep at it. This will take some practice because there is quite a bit of co-ordination between both hands to learn. There is no palm muting at all - to play funk properly it is important to play freely from the wrist with regular open strums. All the muting is done with your fretboard hand. Open strumming on muted strings gives that 'clickity click' effect, which is the backbone of funk rhythm sounds. Watch the introduction video for more information on this.

Some people call this the "Hendrix chord" because Jimi Hendrix used it in his song 'Purple Haze'. The chord is E7#9(no 5th).