“I think I'll sit this one out.”
You're at a bar where people are dancing. Your friend invites you to dance, but you don't want to dance. You say this because you don't like the song that's playing.
I think I'll sit this one out.
Use this expression to announce something that you've just decided to do:
I think I'll take a shower.
I think I'll work from home today.
Don't use this expression if you made your decision earlier or you've been planning something for a long time.
This phrase comes from sports. When you "sit out" a game or a match, you sit outside of the court or field. So "sitting something out" means that you do not participate.
Like many phrasal verbs, "sit out" can have an object following it:
McMannis has had to sit out the last 3 games.
Or when you replace the object with "it", "this one", or another short phrase, it can come between "sit" and "out":
Why don't you sit this one out.