I machine applique. Basicly use a zigzag stitch to trace around the pieces you want to applique. You can use any decorative stitches your machine may have, I just got a new machine that has more than straight and zigzag but haven't done any applique lately.
Lots of folks use a fusible bond to attach the appliques than stitch around them. I use a plain ol' glue stick. I like it because I can pick the appliques up and move them around. Can't do that after you iron the fusible.