When I was maybe around 8 or so, I remember watching this really creepy cartoon, but I can't remember the name of it, and no one in my family remembers it except me. There was a kid, or maybe two, who somehow ended up in a world where the ground and the trees and literally everything in the world was made of like quilted material, and they were traveling around the world and they met all these different animals... I don't know whether this was a movie or a TV show.

But literally, EVERYTHING was quilted. It looked like the entire world in the movie was made of like baby blanket material. And it wasn't meant to be creepy, I don't think. It wasn't creepy in the way that Courage The Cowardly Dog was. The movie was pretty bright/colorful so I don't think it was supposed to be scary. But there were talking animals, rabbits, I think, that were helping the kids... It was kind of similar to the idea behind The Wizard of Oz where the kid ended up someplace strange and was trying to get home, but of course this was animated.
All I remember was that there was this little boy who somehow ended up in a world of blankets, and he was trying to figure out how to get home. Maybe it was all a dream he was having or something, I'm not sure. But he met a bunch of animals who would give him directions until he got home.

And I don't think this ever came on TV, so it's really hard to find. I've been racking my brain for what I can type into Google to get results but I've had no luck :(

Pleasant Dreams (http://www.thepuppetstudio.com/Pleasant.html)?
The Land of Pleasant Dreams: Bearly There At All - YouTube (http://www.youtube.com/watch?v=fcsLViaBxVs)

OH MY GOD.
THANK YOU SO MUCH.
I have been looking for that for YEARS.
Thank you, thank you, thank you!

Happy to help :)