You would be correct to interpret 'knick' here as meaning a quick little dipping of the knees or slight curtsey. However, please note that this is NOT a normal English word. It has this meaning in German, but not in English. In fact, you will probably not find it anywhere other than in this one quotation from Maugham, and you won't find it any dictionary. Forget about it.

Hi! If possible, can you give a little more context. Because 'Knick' (in my mind) refers to The New York Knicks basketball team. 'Knick' isn't a word, but a word shortened (knick = Knicknerbookers). BUT BUT!! To Knick = To curtsy slightly. Something women do (especially back in the early days), usually if wearing a skirt. Men don't curtsy usually, men would bow. In this sentence; Both women slightly curtsy to each other as a polite gesture. \ Hope this helps!! This word is not used much, most of the time, we would just use 'curtsy'