Knock on wood is a superstitious idiom. It means something like “I really hope to avoid jinxing the outcome I consider desirable.”

Example:

• Janet: How’s it going?
• Bill: Things are really great! My business is doing super well, and I think we’re about to get a really big contract.
• Bill: …knock on wood.

What Bill means is something “I think I’m going to get this contract, but I’m kind of worried that my confidence will jinx it. I am acknowledging this in hopes that it will protect me and that I will in fact get the important contract.”