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Preheat oven to 200°F. Mix applesauce and cinnamon in small bowl until a smooth ball of dough is formed. (You may need use your hands to incorporate all of the cinnamon.) Using about 1/4 of the dough at a time, roll dough to 1/4-inch to 1/3-inch thickness between two sheets of plastic wrap. Peel off top sheet of plastic wrap. Cut dough into desired shapes with 2- to 3-inch cookie cutters. Make a hole at top of ornament with drinking straw or skewer. Place ornaments on baking sheet.
Bake 2 1/2 hours. Cool ornaments on wire rack. (Or, to dry ornaments at room temperature, carefully place them on wire rack. Let stand 1 to 2 days or until thoroughly dry, turning occasionally.)
Insert ribbon through holes and tie to hang. Decorate with opaque paint markers, found in arts and crafts stores, if desired.