Maybe what @holax12 means is that he has drilled out holes in the wood (hardboard?) and mounted the LEDs in the holes (in the shape of "OPEN" or "WELCOME").
@holax12: If it is hardboard that you are using, I don't see why that couldn't look good. Usually such signs are done in acrylic, but if you put a good paint job on the board after drilling (ie - use primer, then apply more than one coat, sanding between coats, then maybe a clear sealer and waxing/buffing - oh, and the paints should be acrylic) it should look pretty nice.
Another option (after drilling) would be to spray on a couple of coats of acrylic paint, then mount and check the operation of the LEDs. Once complete, seal the LEDs in place with silicone or hot glue on the -backside- of the board. Build a frame for the board to fit snugly in (and seal the back edges), then pour acrylic casting resin (after mixing the hardener in) over the front surface and LEDs, to a thickness that just covers the LEDs and let it cure.