Open a new window with WIDTH 300, HEIGHT 200, and transparent background. Draw a 20x20 pixel white circle on it as as shown below. Select it with a Rectangular Marquee Tool and go to Edit > Define Pattern and give a name like circle or something.

Make a new layer and fill it with white, delete the one with the circle we don't need that anymore. Make another new layer, choose Paint Bucket Tool (G) - Select your circle pattern and fill the new layer with it.

Select the layer with the Pattern and choose Blending Modes > Inner shadow Select the Opacity 50, Distance 2, and Size 8 as shown below. Click OK.

By now you should have an Image like this.