I love smocking. I do. I love watching the fabric ruffle up under the presser foot...I love making something that people think I purchased premade hehehe. I have made a few smocked dresses for adults but lately I been making them for babies and kids. These are just so darned cute. I really like them, and I dress Maylee in these lil smocked dresses a lot.

Here is a short tutorial for doing smocking yourself:
First you have to locate some elastic thread. I buy mine at Hancocks fabric store and its located with the elastic not the thread! This is important to remember so you arent wondering all over the store like I did LOL. I have also seen this at Wal-mart if you can live with yourself for going in there...I have heavy guilt upon stepping in the place LOL
Once you locate the elastic thread (which is about 1.19 for a spool) you wind up a buncha bobbins with it, you dont want to be running out and having to wind a new bobbin every time so wind up a bunch. I find I can get about 4 bobbins out of a spool, and one bobbin seems to be enough to smock 2 45 inch wide pieces of fabric for baby dresses.
When you wind the bobbins kinda pull on the elastic a bit to make it stretch out some, this is important!
OK now your ready!
Take your fabric and cut it along the length to the length you want for a dress...for Maylee I cut it about 17 inches long...about half a yard does the trick. For an adult dress I use a full yard...actually two full yards. You sew together the sides of the fabric so that you have a piece thats 90 inches wide and 1 yard long.
now you roll over the top part along the width of the fabric and "hem" it....just give it a couple of turns to hide the raw edge and stitch it down.
Pop in an elastic wound bobbin and use plain thread in the top of your machine, you can match the color of the fabric, use white, use glittery thread even! get creative! Set your machine to make the longest straight stitch it will make.
Make your first row of stitches along the very edge of your "hem" in the fabric. You will see it start to pucker up just with this first row.
Make your second row just under the first and what I do is I measure the width between rows with my presser foot. I make sure the edge of the presser foot is just under the last row I made, that way all the rows are evenly spaced, and you can use the last row as a guide to make the next one so all the rows are straight!
Once you have smocked enough so that the "bodice" is the width you want it them you can stop and sew both sides of the fabric together...make sure you take that elastic bobbin out once your done smocking LOL.
Then you can hem the bottom of the dress, and add some lace, or pearls, ruffles, fringe...anything you like! Then you can add straps to the top. I use bias tape sometimes to make straps, and sometimes I just make them out of plain white fabric. It seems to be easier as far as placement to make the kind of straps that tie behind the neck rather than at the shoulders...if you have a baby handy to measure then making the shoulder ties is easier.Sometimes friendly neighbors will let you borrow their baby to take measurements, just dont forget to return it when your done!
Hope this helps someone out there to learn the joys of smocking! I hope I havent confused you farther LOL If you have questions feel free to email me at auroras_garden@insightbb.com
UPDATE 06-27-09
I decided to do some videos to demonstrate how to do this smocking thing, I hope I didnt leave out TOO much info. these videos were uploaded to my youtube account so they do contain referances to this blog post but your already here so no worries! Thanks so much to askanissa.com for making this post so popular over a year later