You could use an applique (satin) stitch freehand on your machine. But, it takes some practice with steady hands to get it to look nice.
In the video, she uses a heat bonded stabilizer. If you don't use a bonded stabilizer, you'd want to put the fabric and stabilizer in a hoop to keep the fabric tight. If you are going to manipulate the fabric manually, you also would drop the feed dogs.
Machine Applique Tutorial
Tips for Machine Appliqu
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How to Monogram with Basic Sewing Machine (in this video, she turns the fabric while stitching but to get a nice letter, you can try not turning the fabric to go around curves)
How to embroider on home sewing machine (she manually manipulates the fabric, uses a free motion quilting foot, drops the feed dogs, and uses stabilizer and a hoop)
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