http://www.adafruit.com/category/70 (Skill badges page)
Step 1: Prep the Patches
When these come from Adafruit they have UPC stickers attached to them. My first thought was just to peel them off. This left sticker residue that was very tough to pull off. For the other dozen patches, I'd "make" smarter. I pre-heated the patches and the stickers came right off.
Step 2: Start Ironing
Iron on patches are pretty easy. Get iron really hot, have fabric in between iron and patches, leave hot iron on there for 30 seconds. Yeah, that's about it. But also pay attention to where you place things. Square edges will peel where the fabric curves.
Step 3: Fill With Cool Hacker Stuff
Put your coolest gear in there or just boring textbooks and show-off that awesome bag.