Start with some kind of shirt in jersey--cotton or cotton/lycra is best. Make sure it doesn't fit too tight, because when you're finished it won't stretch very much at the waist. Then lay it out smoothly and trim off the bottom hem.
Next, take a coordinating piece of quilting cotton or similar material and make sure that it is even along the cut end--Usually I just clip the selvedge a couple of inches from the cut end and tear it.
You'll need to measure at this point to see how long a skirt you need for your little dress recipient. Generally, I just take the tape measure and put it on her shoulder at the approximate shoulder seam, let the measure dangle, and note how many inches from shoulder seam to desired hem length. You can also measure a dress you already know fits well (or a dress that you know is 3 inches too short for that matter). I don't measure for these dresses super-duper accurately--frankly, it's a one-hour play dress, how hard am I gonna try, really?
Next, measure your Tshirt with the cut-off hem from shoulder to the cut edge and subtract this amount from your dress measurement. Then add 2" to your dress measurement (for hem 1" and seam allowance 2 X 1/2"). Cut (or tear) your quilting cotton this long and the entire width of the fabric. If you want a really full skirt, you can cut two lengths and seam them together for a 90 inch hem--phew!! that's alot of skirt :)
Make sure that the length of your gathered fabric is close to the width of the bottom edge of the Tshirt. Fold it in half and compare the two--the skirt waist seam (which is the edge you just gathered) should be a little longer than the Tshirt width.
Carefully lay the two ends together so you can see where the seamline needs to be for the skirt to fit smoothly into the Tshirt. A little too long is better than too short, since you can always smoosh a little extra fullness into the seam, but you don't want to smoosh the Tshirt into a too-narrow skirt. Stitch a half inch or so or use a pin to mark the seam line.
Lay out the skirt and trim off the excess. You should do this laying flat on a table so you line up the edges evenly.
Now stitch the skirt side seam and finish the edge however you like.
Next, serge or zigzag the waist seam. This seam needs some stretch or it will definitely break the thread the first time it is put on. Stitch over the basting stitches so they won't be seen from the right side.
Trim any stray threads, pull any visible basting stitches and hem your beautiful new creation. This is a good time to use those decorative stitches on your machine that you never use.
That's it! That's really it! These are quick and fun and easy! You just made some little girl very, very happy :)