If I get a chance to take pictures during the process, I will definitely show a little tutorial.
You use 1 1/4 yards homespun type of fabric. This is a woven fabric that has the fabric pattern on both sides. You can do it with other fabrics and the effect can be neat but definitely not as nice. Do not use flannel - you would think it would be softer but it isn't at all.
You will also need something to cut the fabric with - I highly recommend the Olfa Chenille Cutter. I think they also used electric scissors on the show.
It is complicated to explain but the gist of it is that you will be sewing on the bias. You fold your fabric in a manner so you can cut on the bias and make 6" layers. You will need 5 layers - this you can get out of the fabric. The middle layer is left longer with two outer layers on both sides.
You will then sew even channels along the fabric (see the ridges in the scarf?) When complete, you will cut the outer two layers of fabric on each side. Wash and dry and poof! A nice, soft, fuzzy scarf.
Sorry these instructions aren't explicit.
I really like the Sewing with Nancy show. I learned a lot from the shows when I first started sewing a couple years ago. She and her guests usually make ugly stuff but her techniques and knowledge are first class. Plus they feature Creative Kindness segments which show crafters using their skills to help those in need. You can tell that Nancy is a nice, gentle person with a good heart. Plus, she is a kick-ass business woman from my neck of the woods.