Question on sewing cutouts

[butterfield8.livejournal.com]

OK, I keep seeing bags with sewn in things, for example, letters, but the letter is not sewn on top, its coming from underneath, the bottom layer. I think this looks really great because the letter (or whatever your sewing on) doesn't fray. So, A) Can someone tell me how to do this and B) How does the top layer (the bag) not fray, either?


I don't know if this is a good example but this is what I mean.