The Blanket stitch, also known as Buttonhole stitch, is most often used with hemstitching, pulled thread on linen or canvas, and on wool applique pieces.
It creates a tidy, even border that completes the look of traditional needlework. It can also be used as a lacy-looking filling stitch.
Check out this short tutorial on the Blanket stitch by Mary Corbet from Needle N’ thread: