The whole applique thing stumped me for ages as everyone just knew what it was ans I felt too stupid to ask, all it is is sticking fabric on top of another fabric and sewing around the edge. There are two types, needle turn and raw edge. i've only ever done raw edge. Basically cut out the shape you want and you can iron on some fusible webing (I like applique magic from logans patchwork - they have an online store if you google them) and then it will be tacky and will semi stick to your base fabric. This lets you build up a design and you can layer objects over one another like a sun coming out over clouds. Then you can blanket stitch or satin stitch around the edges that are visable, you need to lower the feed dogs or put a daring plate over so you can move the fabric freely. My new machine has an applique stitch which makes life a little easier.

Oh BTW when you get round to actually quilting your layers down when you have finished your top you will need to buy a special foot for your machine, either a walking foot if you just want to do straight stich in the ditch (stitching down the seems) or a hopping foot to stipple (basically draw on your quilt with thread, this is my FAVOURITE part!)