This was one of my baby shower gifts for my friend (does the fabric look familiar). The process is very similar to my heart applique shirt and my knee patches.
Optional: machine stitching edges
Figure out what letter you want (I use a template.) Cut a piece of wonder under a little bigger than your final shape, and a piece of fabric a little bigger than your wonder under.
Iron WU onto fabric per included instructions. Flip it over and trace or draw your letter onto the back. IMPORTANT: Draw your letter in reverse.
Cut it out, peel backing of your letter, place in center of your shirt and iron on following instructions.
With that, you can be done, but you can also take it a step further and sew the edges of the letter. I use heave duty wonder under that says "no sewing needed" but I always finish it off. I have found that maneuvering those tiny little onsies on my sewing machine is a little bit easier if I take off my tool box. Also make sure when you are sewing you are only sewing the top layer! (Ask me how I know that?? ;)
I straight stitched my edges this time, but sometimes I zig-zag. Just depends what kind of mood I'm in. Around the tight little corners, I don't use my foot pedal and "hand crank" the machine.
There you go! You can put these on blankets, bibs, burp cloths, you name it!
(This is also Sewing Challenge #19)