Argyle took a 60th-minute lead through on-loan Sheffield Wednesday striker Caolan Lavery, whose strike beat diving United goalkeeper Michael Poke at his near post for pace.
The Pilgrims surged further ahead in the 85th minute when an acrobatic Lewis Alessandra used his chest to convert a right-wing cross by skipper Conor Hourihane.
Defeat for Torquay came just three days after they also went down 3-1 at home to fellow neighbours Exeter.
Knill - whose side remain second bottom in League Two - said: "It's difficult to say we can take positives after we have just lost two derbies and, again, we were in both games until that first goal goes in.
"It's the oldest cliche in the game and I keep repeating myself but goals change games.
"After the first goal we have to change (formation), come out and open ourselves up. It was no different to the game on Sunday really and the second goal Exeter scored, we were well in the game, doing the right things and yet we make a mistake then get punished for it.
"It was exactly the same here, after that first goal. It was always going to be about whoever got that first goal. The other team would always have to chase and come out.
"We gave the goal away and that's why we are where we are.
"We can't keep it out of our net. Last month we changed the shape and looked more solid for three games then all of a sudden we conceded three on Sunday, two here and that's not how you climb the league.
"I am a big believer that you don't have to score bag fulls you have to not concede first and build from that and we are not doing that."