You will need:
Cloth of some sort. I used a black twin sized 100% cotton sheet.
I also used some iron on stars for decorations. You could skip that part, or do something else.
Disclaimer: I am using a really old digital camera, so all the red tones are insane when compared to the reality I normally view.
Step 1: Cut Fabric to size
It's your napkin, so make it as big or as small as you need. My whim was motivated by my fabric size.
I just used my rotary cutter, a yardstick, and a cutting mat on the floor. I suppose you could cut or tear the fabric in any fashion. That almost frightens me, as on this site it's not hard to imagine that someone could be using all manner of insane devices to cut the fabric. Experimental use of cutting torches, high power water jets, and whatnot could be employed, and probably are no more dangerous than a rotary cutter in my clumsy hands.