It's pretty simple. Suppose you weigh 100kg, or 220 pounds and you have 20% bf.
That would mean you have 20kg or 44pounds of bodyfat. Leaving you with 80kg or 176lbs of lean mass.
Now you want to trop 2%, leaving you with 18% bodyfat.
You take the lean mass as your base and devide 80kg by 100-18% or 80/82% = 97,6kg or 214,6 lbs.
The formula assumes that your lean body mass stays the same.