To begin, hold your two sticks together in a cross. If you're doing this with children, it's a good idea to put a small dab of glue on here to prevent slipping.
Wrap a length of yarn one or two times around the top arm of the cross, right where the two sticks meet, going counterclockwise (be sure to hold the loose tail in place and wrap the yarn over it to keep it from unraveling later).
As you come around on the left side of the upper arm, cross down and over to the bottom side of the right arm.
Bring the yarn out behind the top of the right arm, and cross over to the left side of the bottom arm.
Finally, bring the yarn from the right side of the bottom arm across to the top side of the left arm. This is actually easier than it sounds.
Continue wrapping the sticks in the same order until you have a good amount of the color you're working in.
Then switch to a new color, and continue the process until you want to change again.
Finish it off with a length of yarn tied in a loop, so you can hang your god's eye. What you'll end up with will look like the photo in the picture.
Finally, you can decorate the ends of the sticks with feathers, ribbons, beads, or crystals, whatever you prefer.