She cuts out the applique patterns for the angels and leaves about 1/8″ for the stitches. Then uses her turning tools to flip it right side out. From there you can add batting.
With all the parts trimmed and turned, they combine them to form the angel on the placement sheet. Near the end of the video, they show 2 different applique quilting methods.
Watch part 3 next on how to add flower embellishments.