Here's a step-by-step tutorial on how to create tilt-shift miniature fakes with just a few effects in Photoshop.
Tilt-shift photography tends to work best for photos that have a wide view and are taken from higher ground. The photo doesn't necessarily have to be an aerial shot, but it should be something that is composed of many small parts that make up a whole. You should be able to envision how your photo might be manipulated to look like a miniature model, even before its Photoshop transformation.
Using the Gradient tool, draw a vertical, perpendicular line. This is a tricky step. You want to start the line in an area that you want to be in focus, and then end the line in an area that you want to be out of focus.
For best effects, your in-focus area should be something closer to you, rather than farther. In the photo below, we've outlined in red the line we drew. Note how it starts with the in-focus and closer white house and ends where the buildings are less distinct and out of focus.
Tilt-shift shots are mainly for an areial view. So the more landscape and buildings involved, the better. Say if I were to take a picture of downtown Portland, to emphasize shape, size and quanity this tutorial would be the one I would turn to for help.