Confused :( Help regarding Warm up exercises

Hi guys,

I am a newbie and just a beginner in guitar. I have visited threads showing "warm up exercises"..... i am able to understand the string name "E" "G" and all, but what i am confused is with 1-2-3-4 what does this mean.... how should i play ?

pls help me guys

 

1 means first fret
2 means second fret
...
and so on

 

HOW TO PLAY:

if you have something like 1-2-3-4: Use all 4 fingers of fretting hand. Pick alternatively(up & down)

if you have something like 1-2-3: Use any 3 fingers. Good exercise for finger independence.