I've made blankets this way but I never thought to stuff them and make a dog bed! Would work as a floor pillow for kids' reading nook in the playroom. And I don't have a dog, so a floor pillow for baby would be good!
Would be fun kid hideout space! Awesome dog kennel under the stairs design idea. If you want an indoor dog house, utilizing the space under the stairs for a cozy, attractive and practical space for dogs is a good idea! I love this design.