From: haleysteadman.blogspot.comHere is what you do. First find a towel without any ribbing. I found mine at JC Penney. Fold in half. If you want to do some applique, do it before the next step.
After you applique, fold in half, right sides together. Sew around edges. Leave 6 - 8 inches in the top-middle open. Cut batting to the size of the towel
Fold batting in thirds and insert into the opening in the top.
Open batting in the towel and smooth flat. Hand stitch the opening at the top closed.
Quilt the towel with a large blunt needle and the yarn of your choice. I placed quarters on the towel to map out where I wanted to thread the yard.
After you thread and knot your ties, cut with scissors to desired length.
That's it. A soft, puffy towel for baby.