Yes, you cut to fit the shapes of the scraps. Then lay out your blocks on a bed, floor, etc... and re arrange them to suit your taste. With the warm wishes pattern, you can make the rail blocks and the squares out of different fabrics and you will end up with a beautiful scrappy quilt.
I would start with the square blocks and then use what is left for the rail pieces for this pattern.
I am sure that you will get some more pattern ideas from other members too :D :D :D