This Instructable will give you a step by step plan for locating, creating and using your very own Top Secret Spy Hole!
I used this as an opportunity to turn some time with my Spies in Training (kids) into a really fun afternoon with them.

Step 1: Tools and Materials.

Materials you need;
Fence with a knot hole knocked out.
Piece of scrap wood. Preferably a piece that matches your fence (incognito).
1 Nail

Tools;
Hammer
Drill with bit slightly larger than diameter of nail
Jig saw or scroll saw
Permanent marker.

Step 2: Location

Using your spy intuition and senses, locate a hole in the fence that is of reasonable height for the spies in training.

Step 3: Building the Hole Cover

Next you need to draw out a reasonably shaped cover for the spy hole. For this step, use the permanent marker to draw out the shape. Cut shape with the scroll saw or jig saw and drill a pilot hole at the top so your nail does not split the wood and so that the hole cover will hang and move easily for your Spies in Training.

After cutting and drilling, my Spies in Training decorated the hole cover with some sort of cryptic spy symbols.

Step 4: Attach Hole Cover

Using your nail and hammer, attach your hole cover to the fence. Be sure not to drive the nail to far in, as this may hinder operation of newly created spy device for Spies in Training.