First you need to cut your interfacing into the right shape - I used the pattern for my dress and cut it out of the interfacing. Add a lot of seam allowance!

Take your fabric and start to rip it - depending on your project you'll need a lot of strips.

Instead of torn fabric you can also use different kinds of yarn, wool, ribbon...

Place your fabric strips (or whatever you use) on the interfacing.

If you think it's enough put another piece of interfacing on top and pin it down in several places.

Here comes the fun part: take your interfacing-sandwich and start stitching all over it with your sewing machine.
You can create a pattern or do it the way I did: just wildly sew all over the place with highspeed xD

Remember that the interfacing will be gone in the end, you'll need to connect your fabric strips with the seams.
Before removing the interface it's best to check if there are any huge holes and if the borders of your piece are firmly stitched.

Stitch your pattern piece together and create a dress/skirt/whatever you're doing before removing the interfacing.

Skip this step if you're making a scarf ;)

Did I say the stitching was the fun part?
Washing out the interfacing my be even more fun.
Fill your bathtub with water and put your dress into the water - now you can watch the interfacing disappear!

I actually had to wash my dress (using soap) and rinse it several times to remove all the interfacing.

When you're finished put it on a towel and let it dry - that's it =)