I started with (2) 6 x 6 pieces of blue felt and cut out a tooth shape from white felt. With a needle and white yarn I stitched his name at the top, then blanket stitched the tooth to the blue felt, leaving an opening at the top for the tooth and money. Also, about 1/3 of the way down from the top of the tooth I ran a bead of hot glue from side to side to prevent the tooth from falling down too far.
Next, I placed the blue pieces of felt wrong sides together. Because I did a pretty blanket stitch, I didn't have to turn it out. I stitch all the way around leaving an opening just big enough to push some poly fill through. When stuffed, I finished stitching all the way around. Here is a good tutorial on how to do a blanket stitch. It's really quite easy once you get going.
When I showed my son, he was quite excited about it and exclaimed "the tooth fairy is pretty small, so she's going to fit in there real good!"