Very simple to do! You can use any yarn, needle size, and number of stitches. All you need to do to create the dropped stitches is...drop them!
Below is just the small swatch I did for this post. Using Sugar n Cream and US size 6 needles, I cast on 16 stitches. Next, I knit 2 rows. On Row 3, instead of just knitting each stitch in the normal manner, I wrapped the yarn around the needle 3 times before pulling it off the left needle. Then, knit Row 4, dropping all of those extra loops of yarn, and knit Row 5 normally. Row 6 is the next wrapped row. If I were making say, a scarf, I would just continue in this manner until it was as long as I wanted it to be, and end with 2 knit rows and bind off.
You can work as many garter rows in between dropped rows as you like - the choice is yours. The choice is also yours as to how many wraps you want to do. Keep in mind though, the more wraps you have, the longer your dropped sections will be, and the less wraps, the shorter the dropped sections.
Here is a video demonstrating how this is done.