It depends on what fabric you used for the applique. If you used batiks, they fray less so a lighter stitch would be fine like a buttonhole stitch. If it is regular quilting cotton, they are going to fray more. A buttonhole stitch is not going to hold a fabric that is going to fray a lot and us washed often. I think I would use a decorative stitch that is mostly on the applique fabric, like a feather stitch?