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You should always applique the quilt squares before you sew them together. The only exception is if an applique goes over more than one quilt square. In that case, you should attach the applique to only the quilt squares over which it goes. For instance, an octopus that covers almost all the quilt surface, should be sewn "in parts" on each square, making sure that the edges of the design match correctly at each quilt square edge.
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