We did a bit of felting the other day with the intention of making ATC's for an Imagination Tribe trade.  We got a bit carried away though! 

All of these, except the little heart on the bottom right, were wet felted with this technique that is really easy, especially for kids.  The larger squares above are about 6 inches square, so we can get several ATC's out of them.  We haven't cut them up yet, and are not sure how they'll be finished as ATC's.  One thing we could do is needle felt right on top of what was wet felted.

Needle felting uses a Clover tool that has felting needles that are very sharp.  Luckily, this cool tool has them encased in a sleeve that pops up and down each time you push it in.  It's more child friendly, than regular felting needles, but I'd still supervise if the child was younger than 12 or so.

Chloe is making a tree here.  She got so into making little needle felted things that she made several little motifs to add to commercial felt.  Here's another tutorial that shows you what you can do with that technique.  She then decided to make a felt pouch with one of her bird motifs.  It's really cute, but not done yet, so there's no photo.  Meanwhile I got out some embroidered felt pouches that weren't quite finished and did some more work on them.  It was a very felty day!