This type of book making is called Japanese stab bindings, and was developed over hundreds of years. In traditional stab bound books, the text pages are made of thin rice paper; each sheet is printed on one side, and it's folded in half at the fore edge to give strength to the page and keep the ink from soaking through. Front and back covers are attached to the text by decorative stitching at the spine.The concept behind stab bindings is to sew around the outside edge at every opportunity, even if it's at the head or tail rather than at the spine. In fact you must sew into each hole two or more time to complete the pattern on both the front and back covers.
Information and photos courtesy of Cover to Cover: Creative Techniques for Making Beautiful Books, Journals & Albums by Shereen LaPlantz.