This exercise is meant to teach your fingers every possible combination that they can possibly encounter in the first position, as well as the distances that your pick might travel when working on different strings. If you think that it is easy, you're definitely doing it wrong, and please re-read the following instructions.
First, if you do this correctly, you will never play an open string other than the "G". The tablature specifically tells you to use your pinky on the 7th fret when the time comes. Second, you must keep your "drone" finger on the string until the exercise instructs you to make a change. In the first measure, the "drone" is the "E", or the second fret on your "D" string. So in the first measure, you will play your open "G" string, and the second note will be the "E" on the "D" string. That part is easy enough, but the next note isn't. While keeping your index finger on the second fret of the "D" string, put your middle finger on the fourth fret of your "G" string. You have to keep your index finger down because, as you can see, it is the very next note. And you keep on doing this, all the way up the scale.
The exercise becomes progressively more difficult because it requires you to keep your pinky on the 7th fret while using your other fingers to play notes on different strings, all the way over to the "E". It's quite a stretch! If you do the exercise correctly, you will hear mini-chords as you travel up the scale. If you do it wrong and lift your fingers off of the strings, the notes will sound staccato. It will take you a long time to master this exercise, but once you do, you will be able to play almost anything you like. Use these audio files to help you.