Ok, so this one is not a task that kids will likely be participating in, but I'd recommend doing it for kids! Kids love stuff "personalized". Here's a basic fabric to fabric monogramming method (someday I'd love to get a machine that embroiders, but I like the look of this too). I'm sure there are tutorials all over the internet for this, but here is how I did it.
*Object you'd like to monogram- be it a tote, pillow, shirt, stocking... anything fabric can be sewn to.
Scrap of fabric for letter(s)
Heat bond iron-on adhesive
*If you are making the object you are monogramming, make sure you put the letter on before finishing the object if necessary. For example, for a tote you'd want to sew the monogram on the outside fabric before sewing the lining in. If not, or if you purchased the whatever it is you are monogramming, just make sure you're okay with being able to see the stitching on the underside
Get the object you are monogramming ready. Make sure its clean and pressed. Decide where you'd like your monogram and how big you'd like it.
You can free hand the letter if you'd like, but if you don't trust yourself and/or have terrible handwriting, like myself, type the letter, pick a font and size and print it instead. I'm also cheap, so to save on ink select "outline" for you letter (especially if its large).
Cut a piece of the heat bond adhesive big enough to cover your letter. Turn your printed letter over so that it is inverted. With textured side down, place the adhesive over inverted letter. Trace letter onto adhesive. If you can't see the letter well enough, either trace it out on the paper first or I just put it up to the window and trace it that way. The textured side of the adhesive will attach to the wrong side of your letter fabric so that's why you want it inverted. (I'd also suggest just printing the letter already inverted)Place the adhesive with textured side to the wrong side of you letter fabric and iron on medium heat, no steam (or follow manufacturer's instructions).
Cut the letter out carefully. Then, peel off the paper backing of the adhesive.
Place the letter where you want it on your object and iron on. (don't "glide" the iron over the letter, just press down and lift and repeat until the whole letter is securely attached).
Prepare your sewing machine with coordination thread and select what type of stitch, stitch length, etc. you'd like. I'd recommend testing this out on a scrap of fabric before going at it with the letter. Stitch letter to object. - I used a small zig-zag, which was fine, but I must have been glutting for punishment by choosing a lower case "E"... all those stinkin' curves!
Clip threads and Viola! You're done.