I saw a embroidery machine at one of the ISS shows a few years back that could sew very small fonts and was clear as a bell couldn't tell you for the life of me what brand machine it was, but it did a very nice job. I would thing if you could get your hands on roll off woven cloth you might be able to made some nice labels like you would a patch.
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I saw the same thing a couple years ago at the show up here. It was the barudan using 60 weight thread and a 70/10 needle.
Oh, the woven labels are certainly not embroidered. I was just seeking some specific advice on sewing very small details, and if anyone had attempted this for kicks.
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We did years ago. (custom jackets and they got sewn onto the back before they were put together)
If you are doing your own digitizing, where you can manipulate the density and direction of the lettering, you can get fairly small. (density very low)
But all in all, it is not very cost effective, and because they are thicker, they are heavier, and tend to bother the wearer.
Unless you are putting it on the outside of the garment, more like a "patch"
Better off getting woven or printed labels made.