Step 6: Sew in the lights.
The nice thing about making a monstrous teddy bear is that the stitching can be equally monstrous.
As such, when you sew the board to the bear make sure that you sew it up, down, around, over and under. It does not matter how you sew it in so long as the LEDs poke out, the board is held in place and the stiching won't rip out.
Also, try not to get the wires running off the board caught in the stitching. It will save you many headaches later.