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The Land of Pleasant Dreams. Try that one. https://www.youtube.com/watch?v=fcsLViaBxVs
It always opened with an old lady in a rocking chair, and puppets acted out little plots on blanket fields. There were lots of little animals like bunnies and dogs, also made out of patchwork material.
Possibly Maggie and the Ferocious Beast? That started in 2000, but sounds like it could be what you're talking about. http://en.wikipedia.org/wiki/Maggie_and_the_Ferocious_Beast
OMG The land of Pleasant dreams...this post saved my sanity!! For years i have been trying to figure out what the show was i watched when i was like 4 or 5 and all i could remember were like pillows or something. you said patchwork andd quilts and it all came together. thank you sooo much, i have been looking for this for my little girl, i loved it so much!!

I'm looking for a film which I watched frequently in the mid 90's, it could be older though. It was a children's film, or maybe even TV series, which took place in a world made entirely from patchwork and blankets. I'm pretty certain it was set entirely outside, because I can easily visualise the hills and fields in the backgrounds. I don't think there were any humans, the main characters where animals; all stuffed toys, or maybe puppets.
I'm not certain, but I think one of the characters was a blue stuffed dog.