Firstly, you probably shouldn't use the iron on its hottest setting. The best bet is to heat it to the cotton setting and to make sure that you turn the steam option off. It is important that the iron is dry when you use it - and the steam will make it wet. Once heated to full temperature, iron the clothing around the area where you would like to place the label. This area needs to be hot for the special glue to affix properly. Then it's a case of placing the label, pressing it down with the iron firmly and holding it down for a few seconds. Once that is done, iron over it again moving the iron around forwards and backwards to make sure everything is properly stuck in place.
Once you have ironed on your label, you should leave the item of clothing alone for approximately 24 hours to ensure it cools and that the glue sets properly. After that time, you can try lifting one of the corners gently to make sure that the glue is doing its job and that it is all set properly. If it does, you might need to increase the heat on your iron and have another go to see if you can get it fully stick. You should be able to wash clothing once the label has been ironed-on properly. If the label does start to come off, just follow the ironing process.
Imagine how much easier your party will run if all the kids come with their names on the items! All that will be left for you to worry about at the end of the event is handing out the party bags