Smaller pieces that stick out like in Santa, need a much narrower stitch.
You may want to use a stabilizer behind the fabric to reduce the puckering.
Stop with your needle down, and in the background fabric, lift your presser foot, readjust the fabric, lower the foot, and start sewing again. You will need to do this, instead of trying to "drive" the fabric under the presser foot. It will cause puckers and distort your applique if you don't. You may need to do this every few stitches, but it is still faster than hand sewing :wink: