This is not a video tutorial on how to digitize an image to create patches. There are other videos on youtube that can show you how to use your preferred software. For reference, we made our patches using Adobe Photoshop/Illustrator, Click-n-Stitch, and Brother PE-Design. Our machine is a Brother SE400, but this guide will work with anyones machine or even hand embroidered items. This is a technique that can be applied to many different projects.
The items I use in the video are Heat-n-Bond Ultra Bond (found for a few bucks for a yard of it at our local craft store). It's like a big sheet of hot glue that get's ironed onto the back of the patch to help keep all of the back stitches together, gives the patch some mass (to make it thick and strong), to stop the edges from fraying when you cut it out, and also to make the patch an iron-on patch when you are done.
The other item is called Fray Check. Also bought for a couple of bucks from our local craft store (there is enough in one tube for MANY MANY patches). It's basically like really liquidy rubber cement. You put it on the edges of your patch to stop it from fraying before and after you cut out your patch. The glue doesn't change the color your patch or give it a funny feel or smell, it just keeps all of the strings together and makes the patch very durable.
In this video we made a police badge for our son (we customized it for him). It was originally a florida police badge I found on brandsoftheworld.com, and I used Illustrator and Photoshop to edit it (removed the Florida seal and text, and added my sons name and few other little details for him). Then I digitized the image in Click-n-Stitch, and then I did some fine tuning and layout stuff in PE-Design (I don't like PE-Designs digitizing wizard as much as click-n-stitch's).
The other patches you see were made for our other kids and were some of the first tests we did to see if the patches would hold up with this method. They have been great so far, and our kids love them (we used glow-in-the-dark thread for the letters on the Minecraft patch, very popular with our son).