
First of all, let me put it right out there that I am not an expert on this subject by any means. I am learning as I go, and I am loving how fun machine applique is. Several of you have emailed me to ask what technique I use, so I thought I would do a post on my methods.
There are dozens of ways to do machine applique, all which give good results. This is just the way I happen to do it and so far so good as far as I am concerned.
A product that is so essential, I doubt I'd get good results without, is Seam A Seam 2. It comes in sheets, but I find it more economical to buy it by the roll.

It comes with helpful instructions in three languages, telling you how to use it. A picture is worth a thousand words, so here goes.

Basically, the stuff is a fusible interfacing that has paper on two sides. One side of the paper comes off without hardly trying. I am lifting that layer up in the photo above. The layer on the bottom is the sticky iron on interfacing and another more secure layer of paper.
You want to trace your applique design *on the paper that is adhering most securely*. You can also use a plastic template if you prefer. Trace the design on the template, cut it out and trace around it on the top of the Seam A Seam 2.

I am using a Sharpie pen to trace my design. The thing about applique is (and you will realize this at some point once you are into it), sometimes you need to reverse the design. I don't know what to tell you about this, except to keep your wits about you. If you want your kitty cat to be looking to the right, you may have to reverse the design in order to achieve that. Nothing worse that cutting out your shape, ironing it onto your fabric, and then realizing Kitty is looking in the opposite direction. Sometimes your pattern gives you a clue, but often not. These simple star shapes don't have that issue since the design in the same no matter if it is reversed or not.
NOTE: As some readers have commented, if your applique piece is large (such as my pumpkins), you may want to cut out the center of your Steam A Seam 2 shape to eliminate extra stiffness. For the tiny shapes I don't think it matters so much.
Cut your paper pattern out, leaving a rough seam allowance all around the edges.

So, then remove that piece of paper that is practically falling off anyway, and iron the side that is now exposed to the WRONG side of your fabric. This may seem obvious, but if you are a beginner, then God bless you, you might do it wrong the first time. I did. Use a pressing cloth. The fusible stuff is sticky and will really mess up your iron.
Now you are ready to cut out your shape, just like playing paper dolls.

Cut on the lines.

Now you are ready to peel off that second layer of paper that wants to stick better. It comes off pretty easily but you might need to use your fingernail or the point of your seam ripper to get it started. What you now have on the wrong side of your applique shape is a sticky surface.
Position your applique piece on the right side of your background.

Iron it down. I am not using a pressing cloth in this picture in order for you to see things clearly. But, when you iron your piece down *use a pressing cloth*. Promise me.
Now your little shape is all ready to applique in place. You are going to use a blanket stitch and sew right over those raw edges, which are all stablilized by the Seam A Seam 2. It will be a nice stiff surface to sew on.

I match my thread (top and bobbin) to the piece being appliqued. I use an Open Toe applique foot. In my case, a #20 for my Bernina. The thing about the open toe foot is that you can see just where the needle is going to go down, and therefore fudge it around a bit to get it in exactly the right spot.
Tools, friends. Use the right tool for the job and you will be a happy camper.

I set my machine to the Blanket Stitch, which on my Bernina is #25. Your machine may have a different number, but see the little picture? It is like a backwards comb. That is what you want. The needle goes down on the very outside edge of the applique piece for a couple of stitches, then takes a little bite into the body of the piece. Isn't it neat and tidy?

Here is a finished star. Some folks have asked if the star points are tricky and they really aren't. With that open toe foot, you can totally see where you are, and going slowly, position your needle just right every time.
Oh, that is another tip. Go slowly. And if you are working with a really teensy piece, you may want to shorten (make smaller) your stitch length.
I have not been doing this long, but I tell you, when I look at what I have accomplished, I am really satisfied! I think applique adds a fabulous touch to a quilt. If you haven't tried it, do give it a chance. It is so fun.