In addition to the obvious like the Silhouette Cameo & cutting mat, I used a separate blade for fabric. Silhouette sells a blue fabric blade, but it's actually the same as the paper blade, except it's blue so that you know it's just for fabric. I already had a spare unused blade so I put some electrical tape on the top to designate it as the "fabric blade." I also used fusible web, which I found critical to the process.
1) Bond your fabric to the fusible web. I made the mistake of using steam the first time, and not bonding it super well the 2nd time. I discovered that a hot dry iron is a must, and that the better the fabric bonded with the web, the better the results were. So take time to bond every inch of your fabric with the web, *especially* the edges and corners.
2) Remove the back sheet of the fusible web to reveal the sticky glue.
3) Carefully apply the fabric to the cutting mat, fusible web-side down. Take time to pat and make sure there are no creases and wrinkles.
4) Change the blade in the cutter. I turned the blade to 4. In the Silhouette Studio software, also specify that you're cutting fabric.
6) Carefully peel the unused fabric from the cutting mat. Quite a bit of the fusible web will be stuck to the mat, but I got it off easily with my nails.
7) Carefully peel the cut pieces from the mat. A spatula would help for really delicate pieces, though I got all my pieces with just my fingers. Now it can be directly ironed on to the fabric to fuse.