I think you are talking about serger crochet. It is done with crochet thread and you over cast the edge, then you catch the edge on the next row, etc. The you have the edge you want. I have done this on towels and it looks great. I also have found if you take a piece of twill tape the color of the towel/thread and do the seger crochet on that, you can take it off when you wash the towel and it looks better longer.
If you go to Baby Lock USA, they have a baby bonnet made out of serger crochet.