1. Gather up all of your kids' old broken crayons. Look under the couch, among the sheets on the bed, in all the toyboxes, and in the crisper drawer of your refrigerator. Ignore all the other disgusting things you find in your search--it's important to stay focused here.
I'm an art snob, so my kids only use Crayola brand crayons--Prang are good, too, but Crayola is more readily available. You should know, though, that if you mix crayon brands, your crayons won't melt as neatly--they all have slightly different melting temperatures, you see, and if they have a lower melting temperature than I'm accounting for they'll get so hot that the pigment will separate from the wax, and if they have a hotter melting temperature, they won't melt at all in this oven. They'll look fine and be perfectly serviceable for your own kiddos, but might not be the peak of perfection if you're making them as gifts.
2. Peel all the paper and cat hair off of your crayons, break them into small pieces, and sort them into your molds.
While obviously you should encourage your kids to organize their crayon bits however the heck they want, if you want to make yourself a couple of very attractive crayons, consider limiting your color palette to two or three choices per crayon, and strictly limit the amount of darker colors that you put in each mold--the darker crayons will show up really well, and can be quite overwhelming.
As for molds, the muffin tin is the standard choice, but it can be very difficult to pop the crayon out when it's finished, and the same goes for bakeable candy molds. My personal favorite choice is a flexible silicone baking mold--it's much better for easing your crayon out when you're done, and it comes in lots of fancy shapes. For a silicone mold with small shapes like the heart mold in the back of the above photo, two crayons are ample; for one with medium shapes like the mold in the forefront, five or more crayons will work.
3. Put your mold into the oven, turn it to around 200 degrees, and wait at least an hour. You can melt your crayons quicker with a higher temperature, but this will also tend to separate the pigment from the wax, so you'll have a muddy brown bottom and a translucent top on every crayon.
Check on your crayons every now and then, and when all the pieces are liquid, turn off the oven and let the crayons set until they're solid again. If you need to, you can remove your mold, but this will tend to mix up your colors--if you leave the mold until they're set, they'll look much more nicely striated.
4. When your crayons are at least solid, even if only barely so, you can remove the mold to a countertop to finish cooling completely. Don't unmold the crayons prematurely, even if you want to, or you'll moosh them a little.
5. When your crayons are completely cooled, flex the edges of each mold away from the crayon, push gently on the bottom of each mold until you feel the crayon release from the bottom, and then gently ease out your crayon. You only need to be particularly careful about this part if your mold includes any fiddly bits--sticky-outies or such.
6. Do a lot of coloring.
If you're a lazybones or you don't have a couple of hours to kill or your own unreasonably large stash of crayons, check out my melted crayon autumn leaves and Christmas-colored hearts up in my etsy shop.