This is the way I do it, your technique may vary...

Knife control in short slow pushes rather than heavy long strokes is the key to making a fuzz stick.

I start at the end of the stick furthest away from myself. I hold the stick close to, but behind the blade with my left hand, hold the knife in my right hand and push the knife forward in a very deliberate and controlled manner with both thumbs. I start at a shallow angle and both push the knife in slightly deeper and twist the blade over to a more perpendicular angle to the stick to curl the wood chip outward. Once a cut is made, I turn the stick and do it again until I've made cuts around the diameter of the stick. Then I move the stick forward (away from myself) and start the next row. Make sure that the cuts aren't so deep that you cut the stick in half. Also make sure that your off hand is always behind and not in front of the blade.

Note: The above would be easy for me to show you, but when I write it out I have no idea if the concept is clear or not. I'm also sure that there is probably terminology out there for the type of cut I described that would perfectly explain what it is. However, I have no idea what that word could be. <img src="/images/graemlins/tongue.gif" alt="" />

A good sharp knife with something better than the standard factory angle makes the job a lot easier as well.

As raydarkhorse mentioned, a fuzz stick is more of a kindling stage piece of wood rather than something you would want to use as tinder.