First cut a nice long strip of plaid. The length isn't too important but since you'll be pleating, longer is better. For a baby or toddler, I cut it about 48" (or however tall the bolt is...I like easy) and the width is however long you want the kilt to be on your child plus a couple inches for seam allowance. This is also a good time to hem the entire length of what will be the bottom of your kilt since it will be easier to do before it is pleated, but you can do it at the end too :-)
Next measure your child's waist and round it to something easy. I'm going to use 20" for this tutorial since this will fit children from about 1 year to about 3 years old pretty well since the waist will be adjustable. First divide your measurement by 2 to figure out the measurement for the front and back of your kilt. In this case that is 10". The front of the kilt will have a flap that wraps around, so there will be two panels in the front. So I need three 10" sections. I measured 10" on each end of the length of plaid, and the amount left between these two sections I pleated up until it also measured 10" for three even sections. (Pleating is fairly easy with plaid because you can use the lines on the fabric to make sure your folds are even, so no rulers!) I just used trial and error to figure out how many pleats and what size to make them to gather up the fabric to the dimension I wanted, but you could always use math to figure this out first!
Once you've pinned down your pleats, it's time to iron them flat. Ironing is a must on this project! Line up your plaids lines from top to bottom and iron the folds the whole length of the skirt. Once you are done you should have a rectangle (in this case one that is 30" x by whatever length you want the skirt to be)
Now it's time to go to the sewing machine. Sew down your pleats across the top to secure them. Next you can sew each pleat down vertically very close to the ironed edge. I sewed mine down about 3.5" then backstitched to reinforce, being careful to line them up as you go. Don't sew them down all the way! As you can see in this picture, I pinned the pleats down to help keep them lined up as I went. Once they are all secured they will look like the picture on the right. At this point you can trim your threads.
Now you can fold over the top and hem it down for nice clean top edge. If you haven't hemmed the bottom yet, do that as well. The final step is to sew on velcro. Sew velcro across the top right-side of one front flap, and the top wrong-side of the other. I sewed velcro the entire length of both flaps so that the kilt can easily be adjusted since this blue and red kilt was for a friend whose little guy has a lot of growing left to do! Here is the one I made for my daughter using the same directions, except hers tied on.
I recently came across a link with directions for making a more detailed kilt, so if you are interested in that, here you go!