It sounds like you want to do the "quilt as you go" method, where the putting together of the pieces also functions as the quilting because you sew through all layers. Why on earth would you want to do that by hand? Sorry - personal bias crept in. (If I depended on hand-sewing, I would never finish anything.)
I would suggest that you want that seam to be as tight as possible coz it is doing double-duty.
Why don't you watch a couple of tutorials on the "quilt as you go" method to fully understand how the individual squares get attached to each other later. The log cabin is a good pattern for what you intend.
IMHO, over-sized and cutting down insures that you have enough backing and batting.