If you want to make a small, iron-on patch with clear and crisp B&W text (I make custom My Little Pony plushes and needed an image of the 'Pull to Open' sign on the door for the cutie mark of a TARDIS pony), this technique works well.
Step 1: Materials Needed:
B&W Laser Print
Wide clear packing tape
Iron-on patch fabric (Dritz or other)
Step 2: Prepare Your Transfer:
Print your B&W image with a laser printer. I find small images work well (1" square). If this print is text, print it as you would read it (not reversed).
Lay clear tape over your laser print. With a coin, thumbnail or plastic card, burnish the tape on the image so that the image is completely adhered to the adhesive. Cut out.
Rub the paper from the back of the tape with water. The tape should appear clear again, with the image adhered.
Place your fabric on a piece of parchment paper and wet fabric thoroughly with 100% acetone.
Step 3: Transfer!
Place image on wet fabric; cover with more parchment paper to prevent rapid evaporation of acetone. Burnish for at least 10 seconds. By this point, all text or B&W detailing should have transferred. Remove parchment and tape and observe your handiwork. As shown, some transfers will not be perfect. In the top (yellow) example, the patch fabric was fully saturated and the transfer was perfect. In the bottom two, the fabric was not wet enough and attempts to re-dampen/re-locate the tape to finish transferring ink was incomplete and/or fuzzy.
Please note: color transfers poorly/incompletely to the lightweight Dritz patch fabric.
Extended saturation with acetone may cause the adhesive background of the patch fabric to detach. Heavier patch fabrics may respond differently. Be prepared to make several attempts until you get exactly the look you want.
Image will not blur when patch is ironed onto the item of your choice. Edges of patch may fray. In my example (TARDIS pony), I used matching blue acrylic fabric paint to carefully touch up all around the edges, covering the bits of thread and preventing further fraying.