Imagine a race around a track where players line up at the starting line. Player 1 starts running around the track Then Player 2 takes off after them, trying to catch them. When Player 1 gets back to the starting line, Player 3 can go, trying to catch Player 2. If Player 3 passes Player 2, then Player 2 is out. The game continues until only one player remains.
Knockout is like this, except instead of running around a track, they're shooting baskets. The starting line is the free throw line. Player 1 shoots from the free throw line, then shoots from anywhere until they make it (then they pass to next player and go to the end of the line). As soon as Player 1 takes their first shot, Player 2 tries to catch up and make the basket as quickly as possible. If they pass the player in front of them, that player is out. If not, they keep shooting until they make it or the person behind them makes it and gets them out.