I asked one of my friends why her applique and embroidery looked more professional than mine.  She sent me a link to this product, saying that it would keep the stitches from sinking into the fabric.  And it does-- I use it on top of the fabric (I use a tear-away stabilizer on back), anchored in the hoop.  It is so water-soluble that the tiniest spritz from a spray-bottle makes it dissolve, so there's no effort to getting the scraps off.