Let me show you how I did it:
First: Find a fun kitchen towel (this one was an old wedding gift that I love). Fold it in half and iron it to create a crisp crease. Then fold the half into thirds again iron the folds to make a straight crease to guide you.
Second: Cut along the creases with a scissors or rotatory cutter. Third: After cutting the towel into squares (approximately 6" to 8" square) Iron the raw edges with a 1/4" fold and then fold again.
Fourth: Now sew down the folded edge. To help the bulk in the corner cut the inner folds at a 45 degree angle. Cut your thread and you're finished. Now you've got a half dozen little napkins for dinnertime.
You can also use store bought cloth napkins. Each 12"x12" regular sized cloth napkin makes 4 smaller child sized napkins. I say child sized but I actually like using this smaller sized napkin on a daily basis verses the big one.