|Others have posted tips for making a knife-edge baby hem, the only thing I am adding is using my blind-hem foot to facilitate this. I know there are different styles of feet so I don't know if this will work for other types, but it did a great job for me on my Janome.
I didn't take pictures through the whole process, the link to the album above begins after staystitching 1/2" from the edge. Here are the steps:
1. Begin with a 5/8" hem allowance.
2. Staystich 1/2" from the edge.
3. With the RS of fabric on top, turn under the hem (toward the feed dogs) along the stitching line as you sew as close to the edge as you dare. I used my blind hem foot to hold down the edge of the fabric.
4. Trim close to the stitching line. (Be careful!)
5. With the WS of the fabric on top, turn up the hem again, enclosing the cut edge, as you sew as close to the edge as you can. I used my blind hem foot as an edge guide here.
I was a chicken when doing this project, so my hem is wider than it could have been. The foot held everything so perfectly I could have sewed a lot closer to the edges.