This fun little posture is a great introduction to the world of arm balances. It strengthens the abs, arms, and adductors, all of which are essential to the concept of "internal lift" that makes hand balancing possible.
To prepare for this posture, spend a little time warming the shoulders with a few Surya Namaskara (Sun Salutations) and then hit the floor for some light hip opening such as Utthan Pristhasana (Lizard Pose) or Akarna Dhanurasana (Archer Pose). When you're all warmed up, come to seated and begin to work your right knee as high up onto your shoulder as you can. Squeeze your upper arm between the calf and thigh and hug your knee against your shoulder. Then plant your hands beside your hips and press down through the palms as you lift up from the belly to hover your hips above the mat. Push into the hands and present the heart forward to avoid sinking into the shoulders. Point the toes of both feet as you float your left leg above the floor. Stay for 5-10 breaths and repeat the posture on the other side.
As with all arm-supported postures, be sure to distribute the weight evenly across the entire surface of both palms and grip with the fingertips to strengthen the hands and support your wrists. If it is too much to float the extended leg, you may practice the posture with the heel resting on the floor, but try to keep the foot active to ensure that the leg is engaged. Advanced practitioners may like to transition from this posture to Eka Pada Koundinyasana II by tucking the extended leg under the body and swinging it back while the front leg stretches forward as shown below: (try to ignore the noise rock in the background.)