The image to the left is a tunic/gown in linen with machine couched yarn. The pattern in this case is applied by the machine and I merely go back when its done and finish the ends and possibly tack down a few missed spots. The red trim on the facing at the neck is a 5 strand braid I did out of the same yarn and hand tacked to the garment. (The over and under tunics are rectangular cut tunics with underarm gussets and side gores and are machine sewn.)
For those wondering, I use a Husqvarna Designer SE machine with an adapter kit that has a special foot and hooks/yarn guides that attach to the back of the machine. The pattern used on this gown is one of the patterns that comes with the kit.
I had to play with several types of yarn before finding one with which I was happy. Some yarn had an issue of it unplying as it was sewn, some would not feed smoothly, and one seemed to apply well but fuzzed up too much after washing. My favorite yarn so far is definitely Caron's County yarn - a Marino/Acrylic blend yarn - that has some sort of cable plying that allows the structure to remain intact when passed though the foot of the machine.