I'm wondering how to go about making this multi-colored blanket. I have some ideas of how to go about it but thought I would check with someone that has done something like this before? Thanks

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To me it seems like the fondant which was colored green was rolled out until a desired thickness was achieved (thinly).
Strips (maybe approximately 2 inches or more) of diferrent colored fondant was evenly placed on top of the rectangle piece of green fondant followed by passing same through a pastry machine and then cutting to the shape of a rectangle.
I remember that the pastry machine is a popular on Cake Boss for evening out fondant. This is the best explanation I can give.

I am not sure if anyoune else has a different idea as to how the blanket was done

Oh, that's cute! Yes, I suspect this is made from strips of different colored fondant. If you don't have a pasta roller you can just use a rolling pin to meld the strips together, but it's hard to get a nice straight edge. The "fringe" looks piped to me.

I'm thinking an airbrush. Taped off, i've done that for black/white and it works well. Never thought to do it for a blanket. Very pretty.

I believe MissSuper directions will work.
Roll piece of green fondant thicker and bigger than the end result you have in mind, then place different colored fondant strips (a little longer than the end result...) in order.
Roll with rolling pin to desired thickness and then since the whole piece is bigger, cut straight edged rectangle with a pizza cutter. The border can be done with a clay extruder or pipped.