Step 1: Use blue painter's tape to create a frame around your hoop (tape it to the back of the inner hoop.)
Step 2: Hoop 2 layers of woven water soluble stabilizer- this is my preference, but you can use your favorite type of stabilizer. I will be adding a fusible covering to the back at the end, so I don't need stabilizer that stays in even though I am working on a knit.
Step 3: Be sure you are using a BALLPOINT needle- mine was size 80. You need this so your knit doesn't get holes from the embroidery. With just the stabilizer hooped, run your "fix" or "baste" stitch, so that you know the area of the design.
Step 4: See the basting area to show you where your design will go? If the basting goes over the tape, just rip that bit off so you are not stitching over it. I ripped out a bit at the bottom.
Step 5: Turn your onesie completely inside out, even the sleeves.
Step 6: With the front on the bottom, fold down about an inch at the top. Be sure your fold goes straight across the grain.
Step 7: Lay the folded onesie on top of your hoop. The fold should go exactly along the top basting row and the onesie must be centered. Lay it on gently, then reach inside and smooth the fabric to stick to all 4 sides. The onesie should not be stretched or bunched up. The fabric should be totally flat and smooth without being stretched at all.
Here's a picture of the onesie stuck to the hoop. The back is facing up and the onesie is inside out.
Step 8: Pull the crotch snap area up to reveal the inside. The fabric that is smooth and stuck to the hoop is the right side of the front of the onesie. This is where your embroidery will go.
Step 9: Attach the hoop to your machine. Be sure the sleeves are not under the hoop. Likewise, be sure any loose fabric is above the hoop. Place a square of clear water soluble stabilizer over your embroidery area and run the "fix" or "basting" area again.
Step 10: Stitch your embroidery design. Stay by your machine and be sure the onesie doesn't get stuck in the stitching. Just keep smoothing the extra fabric out of the way. On a newborn size, you will barely have any leeway around your stitching area and you will probably not be able to do larger than a 4x4 design unless you are on a much larger onesie.
The design stitching out.
Step 11: When you are done stitching, carefully remove the onesie from the hoop. Trim away your "fix" or "basting" threads. Carefully trim the excess stabilizer from front and back. You don't have to be too picky, because the rest will wash out. Send the onesie through a machine was and dry.
Step 12: When your onesie is dry, trim any long bobbin threads and iron the onesie (on the wrong side) so that the embroidery is nice and smooth. Cut a rounded piece of fusible cover to fit over the design plus a little extra. I use the baby interfacing from Farmhouse Fabrics. Floriani Dream Weave Fusible is another good choice. Some of the cheap ones don't stay fused, so don't cut corners here. Iron it to the back of your design. It will make the onesie nice and soft against baby's skin and it looks very finished.
That's it! It is a long tutorial, but once you have done it, it is very easy. Is this how you embroider onesies, too? Let me know what you think of this tutorial.
***Edited to Add: This little pea baby design is a freebie at OPW Members Only Club (free) for January 2012. The little blank area on the leaf was due to my re-sizing of the original, not the fault of the designer, Embroidery Delight. I also removed the pacifier, since none of my kids ever liked them.