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I have done it both ways. Mainly by machine if the binding is not to thick. To be honest my embroidery sucks so I say away from hand stitching when I can.
I was just sitting here thinking about various projects I have and what I'm going to do to label them. Then I thought, hmmm... I wonder what other people do to label their quilts. I'm making a reversible quilt right now, because it is for my son I will probably just embroider directly onto one...