Step 1: Assemble the parts
2. You'll also need a target board (you can do this on a breadboard). I used an extra TV-B-Gone PCB with a programming header and oscillator. If you want to program this once, you can also use the TV-B-Gone itself if you leave the LEDs off until you are done programming.
3. AVR toolchain. I use winavr
4. An ISP programmer. I use usbtinyisp from adafruit, but you can also use the arduino (lots of instructables on this) or this great new shield by randofo
Step 2: Assemble it.
I like mounting the LEDs "surface mount" It's a little tricky if you pre-cut them, but that is the best way, as it is difficult to snip the leads when you try what I show here.
There's an included programmer header. It just gets in the way, and you can't use it once you've attached the LEDs (something about current drain) so leave it off (unless you want to use the board to program the chip before you attach the LEDs)