This stitch uses blanket stitch to make half moon shaped shapes. Usually, it is done as an edging stitch. After making the blanket stitch scallops, the outer side of the fabric is carefully cut away, leaving the projected (convex) part of the scallops to edge the fabric.

You need to know the running stitch and the blanket stitch to be able to continue with this tutorial.

blanket_stitch_scallops_1     blanket_stitch_scallops_2
Fig 1: Begin by making a waved row of running stitch. This running stitch will provide a base to work the blanket stitch over. The running stitch runs from A to B.   Fig 2: Now, turn the fabric around. Our blanket stitch will now begin from the other end of the running stitch row, that is, B.
When doing the blanket stitch, keep the running stitch in between and take the needle in and out as close as possible to the running stitch.
blanket_stitch_scallops_3   Fig 3: A finished portion of the blanket stitch scallops look like this. If this stitch is used as an edging, the top fabric (fabric above the projected part of the scallops) can be cut away carefully, without damaging the stitches.