The counter is used to distinguish the different (session) keys used in the protocols. A relatively standard KDF is used, KDF2. Note that only a single iteration is needed and that no
OtherInfo has been defined, so the specification of KDF2 may look more complex than it is in the PACE protocol. A 32 bit counter is of course overkill for the protocol, but that's just how the counter has been defined.
So you have the counter valued 1, encoded as
00000001 in hexadecimals as input for the encryption key, and a counter valued 2, encoded as
00000002 for the MAC key.
Some of this is explained in the very first sentence of A.2.3, page 33 (the definitions of KDFMAC and KDFENC).
Note that this counter is entirely different from the Send Sequence Counter used within the secure messaging protocol. That counter is either 64 or 128 bits in size.