WoW - Using Large Knapsack

I got Large Knapsack drop/reward (don't remember exactly) and it has been in my bag since a week and I am trying to figure out how to use it. From the description it has (12 slot bag), it seems useful. But when I click on it it says "No equipment slot is available for that item".

I want to make sure I dont regret later by selling it in frustration. Now what to do with this?

If it matters, I am lvl 42 Arms Warrior

Down in the bottom right of your user interface you have your bag bar.

You have room for 4 bags and then your standard bag, you can drag your new bag down and replace an old smaller bag to gain more room, you can not replace the bag that your Large knapsack is in, if you wish to replace that bag you will have to move your large knapsack to another bag first.

You need to put the item into the Bag panel bar at the bottom of the user interface.

Be careful, you need to have an empty space in the bag panel bar to put the item on.

Are you somewhat new to WoW?

This Large Knapsack goes in the bag slot on the bottom right corner of your screen (if you havent changed your UI)

I imagine if you have all your bag slots full as shown in this picture and you attempt to equipt this bag it will tell you that there are no available slots for it. You should see if any of your bags have less then 12 slots and replace it with your Large Knapsack by dragging to over the bag with less slots.