I'm pleased you like my little fairies. I can't remember where I learnt the technique but it is very simple.
I either drew or found the images of the fairies, dragon or unicorn that I liked. I the reduced each image to appliqué "bits" on vixofix. I prepared a backing and batting using iron-on pellon. I appliquéd the images on to the batting/backing using satin stitch. When is was securely fix in place I carefully cut around them with a small very sharp pair of scissors, being very careful not to cut the satin stitching around the edge.
This is a photo of a little fairy mouse that I have half made. He should be finished soon!
And here he is! Once I posted the unfinished mouse I just had to finish him. Humm I think he needs an eye!