When the video says you need to make a script, it simply means right click on the scripts group under the asset browser, select Create and go to Scripts. This will create a script, and inside it will be a Declare a New Function codeblock. The name of that codeblock is important, and for that tutorial series, and most others, that name will need to be the same name as the script.
Function name and Script name should be the same for all pre 2.3 tutorials :
As a background, the change in Gamemaker 2.3 is that a script now contains functions, so all codeblocks need to be placed under a Declare a New Function codeblock instead of just placed by themselves in the script.
In the pre 2.3 tutorial the codeblocks are just dragged into the script, but now every time a script is created, you now need to drag the codeblocks under the Declare a New Function codeblock, like you've done above.
That is shown in this spoiler image :
Now once you've created a script with your declared function inside it, and ensured the script name in the Asset Browser is the same as the Function codeblock name, then you can use an Execute Script codeblock to 'call' the script and have the code inside run. The Execute Script codeblock is placed inside the Step event, which runs 60 times a second, calling and script every step.
Exectue Script example :
If you're doing the first tutorial in the series, at no point are any scripts created, so there is no need to do anything but place that code into the step event. It's the second episode where you will need to use the knowledge mentioned above whenever a script is created.