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I cut watercolor paper 1 1/2" wide x 6" tall, glued a piece of fabric to the back with fabric glue, then I glued smaller pieces on the front, overlapping a little. I didn't use a lot of glue, I was just using it to tack the fabric down so the pieces didn't slip when I went to sew them. The first few I made I didn't glue the front fabrics down (just the back), and they slipped all over the place and looked yucky. So glue 'em down, then sew all the way around and over the bottom of each little piece. Then punch a hole near the top, add an eyelet if you want, and thread yarn or ribbon through the top. The edges will fray a bit, but I think it adds to it, don't you?
Another cute fabric bookmark tutorial can be found here on Anna Maria Horner's blog.
Spread Fabric glue onto one side of the tin.
Lay it face down onto wrong side of fabric. Flip it all over, smooth out any bumps or wrinkles. (not pictured)
When slightly dry, trim extra fabric off of tin.
After you've trimmed off any over hang fabric, the outside is finished. All you have to do now is cut two pieces of felt (I used pinking shears) to fit inside your tin, glue them in with the fabric glue, and you're done!