For the three-letter set {R, S, T}, find the two-letter combinations.

I realize that this deals with combinations and not permutations. I just do not understand how they want this done.

you want 2 letters at a time, order not important

so
RS
RT
ST

there are only 3 cases
in combination notation
C(3,2) = 3!/(2!1!) = 6/2 = 3