A knight moves to the nearest square not on the same rank, file, or diagonal. (This can be thought of as moving two squares horizontally then one square vertically, or moving one square horizontally then two squares vertically—i.e. in an "L" pattern.) The knight is not blocked by other pieces: it jumps to the new location.
Note that the Knight's possible movement is seriously limited at the edge of the boards. It's usually good to keep in more in the middle with better options for movement.