"Narrow Pass" can only be activated when Player A has 2 or fewer monsters and Player B has 2 or fewer monsters. So if there are 3 monsters in play (2 controlled by A and 1 by B) you can activate "Narrow Pass". But if either player controls 3 or more monsters on his side of the field then you cannot activate this card.
Once "Narrow Pass" is activate, as long as it remains face-up on the field, Player A can Normal Summon or Set 2 up to 2 additional monsters, and Player B can Normal Summon or Set up to 2 additional monsters. It is helpful to place counters on "Narrow Pass" to keep track.
If "Narrow Pass" is activate, and a player Normal Summons his 2 permitted monsters afterwards, if 1 of those is destroyed then he cannot replace it with another Normal Summon. Each player gets 2 additional Normal Summons or Sets, no matter what happens to those monsters afterwards.
"Narrow Pass" does not restrict Special Summons or Flip Summons.