Blanket stitch is also known as open buttonhole stitch. Buttonhole stitch is very similar to blanket stitch. The difference being that the stitches are worked very closely together. It was often used around buttonholes (hence its name) although can also be used in fancy needlework such as cutwork. I often use this stitch for working flowers, especially hollyhocks. Click here for a sample of how this stitch can be used.
Work blanket stitch from left to right along straight lines and curves. When appliqueing bring the needle up on the outer edge to be worked. Pull the needle through the fabric over the top of the thread as shown in the diagram. Click here for a sample of how blanket stitch can be used for hand appliqued projects.