Make a rough pattern on a piece of paper that you've placed on the sleeve. You're only going to cut 2 seams; the waist and the crotch. The sleeve itself forms the inside and outside leg seams, so leave these intact. The hem at the bottom of the sleeve forms the lower edge hem on the trousers so again leave this intact. I've shown where to cut with a dotted line. The pattern involves a certain amount of guess work and compromise - leave yourself enough width for the waist of the trousers, while still allowing enough room for the length and curve of the crotch seam. I could have made this pattern longer - then the waist could also have been wider as the sleeve is wider nearer the top. Cut across the waist, and along the crotch seam, then repeat on the other sleeve so that you now have 2 trouser legs.
Turn one of the legs inside out. Place the other leg inside this one so that they are now right sides together. Pin or baste along the crotch seam. Leave about an inch unjoined at the waist end as you start sewing, just on one side, so that you can thread the elastic through easily later on.
Stitch the seam, then flip it over and stitch it again from the other side to reinforce it.
Now turn the pants inside out, and make a casing for the elastic by folding the waist edge to the inside.
The depth of the fold depends on how much length you've got to play with, and the width of the elastic you're using. Pin, then sew. For best results stitch this from the right side (topstitch) using a twin needle. If you didn't leave a gap in the crotch seam for the elastic, then leave a gap at this point.
Now it's just a case of threading some elastic through the casing. Judge how much elastic to use according to how stretchy the elastic is and how big the baby is - you can check the stretched out length (loop it in your hands) against of pair of pants that fit the baby well. thread the elastic through, then join the two ends together - try the zig-zag stitch on your machine for this.
Ta Da! One pair of baby pants!
(I'm still dreaming of the day when I actually get to make something for myself!)