The most common and most likely answer to this crossword clue is the 8 letter word SMOCKING
I've seen this crossword clue in The Daily Telegraph
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Buddy explains!
The straight part
We know that "fancy needlework" is the straight/definition part of the clue. The straight part is often a synonym or definition, in this case fancy needlework = smocking.The cryptic/wordplay part
In cryptic crossword there's often an wordplay/cryptic part as well.This part involves a more complex hint, such as an anagram, homophone, hidden word, etc.
Sadly, We don't have an explanation for this specific crossword clue yet.
What does SMOCKING mean?
SMOCKING verb- To provide with, or clothe in, a smock or a smock frock.
- To apply smocking.
- An embroidery technique in which the fabric is gathered and then embroidered with decorative stitches to hold the gathers in place; the product of the use of this embroidery technique.