Shopping note: I've purchased most of my petite pom pom trim from this online shop, and have been very happy with them. I've also found it on Etsy, so look around!
Like piping, this kind of insertion works visually to emphasize seamlines. It can also add a splash of a contrasting color. And pom pom trim has a certain whimsy to it that makes any garment fun!
Much like piping, the pom pom trim has a "flange" or "lip" that allows you to sew it easily to a seam allowance. I would avoid the mini or baby pom pom trim that doesn't have this lip, because it's much harder to sew on the edge. Here's an example:
Here is the method I use to insert the trim into a seam. First, on one of the pieces, stitch a line of staystitching right along the seamline. So, if your seam allowance is 5/8", this line of stitching will be exactly at 5/8" from the edge of the fabric.
Next, use this line of stitching to help you place your pom pom trim. The little balls of the trim should go just to the garment side of the staystitching. Using a zipper foot, baste the pom pom trim in place. It doesn't matter where you stitch, right in the center of the "flange" is fine. I place the pom pom trim as I'm stitching (rather than pinning first), because it's easy to see underneath the trim to the staystitching.
Now, grab the other layer of your garment and place the two layers right side together, as you normally would to sew.
With your zipper foot still on, and stitching with the staystitching on top, place another line of stitching right on top of the staystitching. (See? The stay stitching works as a guide both for placing the trim and for making sure your stitching is accurate in this step!)
Trim and grade the seam allowances. Understitch the seam allowances to the facing using the zipper foot, if necessary/desired.
Press the layers so the wrong sides are together. Your little pom poms are just peeking out of the seam!
That's all there is too it. Just be careful: using pom pom trim is totally addictive!