I have a friend that saves every snip of fabric. Even the dog ears you trim off of half square triangles! I'm not sure what all she uses them for but I've seen vests made with a dissolvable base with threads and snips of fabric sewn all over it and then the base is washed away.
One of the winning quilts in one of the quilt shows here recently was made from little tiny pieces no bigger than a quarter of an inch appliqued to the background. It was a spectacular quilt.