This is an fast and easy craft that's so versatile. It doesn't have to be letters. You can also buy wood or cardboard symbols like '&' or shapes. The finished product can be used for so many things, the sky's the limit.
I'll start with the basics. Decide what your purpose is first before you go to the store. I decided I wanted to spell out 'EAT' and hang them up on my kitchen wall. I originally was going to get wood letters but liked the pressed paper ones for this project. Just know if you use them that the sides are layers of paper pressed so isn't really smooth. My letters were small enough that I could use the 81/2"x11" craft paper so picked 3 co-ordinating pieces. Other options are paper napkins, wrapping paper, tissue paper, newsprint, or even fabric. I had paint at home that would work for the sides but craft paint is very inexpensive and you need very little even if you have to buy it. You can cover the edges with your paper if you like but just know it's more difficult.
Start out by painting the edges and letting dry. Next is cutting out the paper. Turn your letter and paper over because it's easier to work from the back. Trace the edge with a pencil and then cut out. Cut just inside the lines if you're putting the letter on the top only. Line it up on top before you apply the Mod Podge (I like matte but you there are many varieties). If you're covering the sides with paper you'll need to leave enough margin to cover the sides and go a little onto the back. You'll also need to clip corners and curves.
Lay out some wax or parchment paper if you have it for the next part. I like an inexpensive foam brush for both the painting & decoupaging. Layer the Mod Podge on the paper. For my letters I did a thin coat on the top of the letter itself also. Place the letter on the top and move it around until it's lined up. Smooth out any bubbles or wrinkles with your fingers or a balled up paper towel. Let dry before trimming any overhanging edges you may have. When covering the sides with paper you may need more Mod Podge and pressure to make it hold. Let dry.
My letters are hanging inside and I chose to not put a coat over the top. It's really up to you. If you want to protect it or get more of a textured finish just put a thin coat of Mod Podge over the paper. I did that with the fall letters that were going outside plus I put one coat of protectant (I used Krylon Satin Finish). If you use tissue paper (2 pieces together so it's less likely to tear) then decoupaging will give a wrinkled, almost leather look. For hanging I used some prongs because my letters are light and thin. Just remember that some letters can be heavier on one side so test before you attach anything or if you're like me you test it and have to move it after. There are all kinds of hanging options at many stores. If you have a thick letter you may be able to stand it like my wood ones. I did have to help out the V by attaching a disk so it's probably better to get one that will stand on it's own.
Now that you see how easy it was to do you're probably wondering why you haven't tried it sooner. Your options are only limited by your imagination (and Pinterest). Spell out a name or word, use on a picture wall, make it for a gift, string some together with ribbon, use in holiday decorations, ......