I find the hardest part in making knitted toys is adding the facial features, especially the eyes. There are lots of different ways to add eyes including toy safety eyes, buttons or beads. But when making toys for younger children these may not be suitable for safety reasons, so you may prefer to use yarn knots for eyes instead (as long as they are securely fastened of course). This my favourite technique for making eyes from yarn.
I usually use black wool to make the eyes, but for the step by step pictures I have used red wool as it is easier to see.
STEP 1 : Use a length of wool approximately 45cm long (I have used a shorter length for the photos so it is easier to see in close up). Make a loop at the middle of the length of yarn, with the right hand end laying over the top (the right hand end is the working end).
STEP 2 : Take the working end over and up through the centre of the loop to make a loose knot.
STEP 3 : Continue to wind the working end through the loose knot.
STEP 4 : The more times you wind, the larger the final knot will be. I usually wind a total of 5 times.
STEP 5 : Hold on to each end of the wool, and pull the knot tight. The loops bunch together as you pull.
You should finish with a knot in the centre of the length of the wool.
To attach the eyes, thread a tapestry needle on one of the ends, and sew in position on the toy's face with the knot on top (the right side of the knitting), and the loose end on the inside (wrong side). Repeat with the other end of the yarn. Tie the two ends together inside the toy's head and hide the loose ends inside the stuffing.
I prefer to add eyes after stuffing the head, as it is easier to judge the position. However, I usually leave a gap in the head seam so that I can tie the two loose ends together and hide inside the finished head.