After teaching students some basics (stage, sprites, costumes, loops, movement, ask/answer, broadcast/receive, variables), I challenged them to create their own projects.
"May I read your mind?" We play a binary guessing game and read their minds. After explaining the game, we program it in Scratch, starting from a project that only requires a few key additions.
In these videos, twelve Scratch educators share examples of student work, lesson plan ideas, assessment rubrics or other experiences from using Scratch in their classrooms.
By the end of this project students have created an animated biome. I have used this with third grade students for two years with great results each time. Tutorials and handouts included.