It has two separate abilities, though they somewhat depend on each other. However, to understand them, you have to look at each individenually.
First:
"Devour 2 (As this enters the battlefield, you may sacrifice any number of creatures. This creature enters the battlefield with twice that many +1/+1 counters on it.)"
The text in parentheses is the help text for this ability, telling you exactly what Devour 2 means. So whenever this creature is sent to the battlefield, you may sacrifice any number of creatures you control. Then, Mycoloth enters the battlefield with *twice* that many +1/+1 counters on it. So if you sac 2 creature to this ability, Mycoloth gets 4 +1/+1 counters. If you sac 6 creatures, it would get 12 +1/+1 counters.
Secondly:
"At the beginning of your upkeep, put a 1/1 green Saproling creature token onto the battlefield for each +1/+1 counter on Mycoloth."
This does not put +1/+1 counters on the battlefield (Counters always go onto permanents on the battlefield, not directly onto the battlefield themselves). At the beginning of the Upkeep step on each of your turns, you get a number of 1/1 creatures equal to the number of +1/+1 counters already on Mycoloth. so if it had 4 +1/+1 counters on it, you'd get 4 1/1 creatures. This repeats each of your turns.
So looking at the whole picture, essentially, for each creautre you sacrifice to Mycoloth as it enters the battlefield, it gets +2/+2, and in addition to this you get 2 1/1 creatures per turn for each sacced creature. This may change, if the number of +1/+1 counters on Mycoloth changes on subsequent turns, such as if you Proliferate it, it gets hit with -1/-1 counters, or gets targetted by an effect such as that on Vampire Hexmage.