There are many different kinds of soakers to make - shorts, skirties, pants. I plan to do tutorials for them all over the winter. Let's start with the sweater arm pants.
Step one: select a pure wool (at least 90% wool) sweater. The softest ones are cashmere, lambswool and merino wool. Read the tag to make sure it's a dry clean only sweater. That will make it right for felting.
Step two: Wash the sweater on the hot water cycle and tumble dry. If you've ever done this by accident, you know that the sweater will thicken and shrink. This is called Hot Wash Felting.
Step three: Cut the arms off the sweater at the shoulder seam. (Save the rest of the sweater for other soakers).
Step four: measure your little one's pant length. Make a knick in the sleeve at this point.
Step five: Cut open the sleeves above your knick.
Step six: Turn one sleeve inside out. Insert the right side out sleeve into the inside out one so that the good sides of both sleeves are facing each other inside.
Step seven: Make sure that you line up the seams of the sweater. This is going to be the crotch seam, so it is a good idea to backstitch here to strengthen it also.
Step eight: Sew where shown. While felted wool won't likely unravel, I still like to zigzag or serge the edges.
Step nine: turn your sleeves right way out and you will have something that looks like this:
Step ten: level off the top.
You will likely need to add more wool to the waist area to make it tall enough to reach your little one's waistline. Many people use the waistband from the sweater since it is already finished on one edge. I have a stash of felted sweaters, so I am making a waistband in a contrasting color. You need to cut the waistband roughly the same size as the top opening of the pants, but wool has some stretch to it, so don't fret if you have two slightly different sized pieces.
Step eleven: Once you've created your waistband piece, turn it inside out and position it over the waist of your pants so that the good sides are facing each other. Sew up the upper seam.
Step twelve: Make a casing for the elastic at the top of the waistband. Insert elastic and finish the waist.
Finally, I always like to add some appliques on the seat. If your pants are too long, just roll them up at the cuff.