I don't think there are specific instructions for this design but in general this is how you do applique. You hoop your fabric with the appropriate stabilizers, the first stitch color on this design is the outline of the square (you stitch that), then you take the hoop out of the machine but don't take the fabric out of the hoop, use a little spray adhesive and stick a little piece of fabric larger then the square where the square is (this is your applique piece), put the hoop back on the machine and stitch the second color. Take the hoop off the machine again and trim the applique fabric close to the outside of the stitching. Put the hoop back in the machine and stitch the 3rd color, it's the outline around the square and over the edge of the square. Then stitch the rest of the colors of the butterfly like normal.
There are probably tutorials somewhere around here.

can't add any more than already posted :) nice explanation ... good luck Ash xx

Sandra, I go here often--there are many good instructions. About half way down they have applique inatructions. Hope you find this helpful also. H&*