I learned how to make felt about 5 years ago when I was living in Australia. I joined the Australian Embroidery Guild and it was one of the projects that we did. I made a little pouch and it was extra special because the wool was Merino (of course).
Fabric can be made by weaving, knitting, or felting. These are the ways that the threads attach to each other to make the larger material. The knots and tangles in felt make a crazy mass that looks like a smooth fabric when the fibers are arranged that way. There are various types of commercial felt, but I am talking about wool. The fibers react to hot and cold, soap, and friction. It is a very basic, primitive method.
Now a days, people are making amazing things with felt. They can be made with commercial wool felt or handmade wool felt. Some are flat, such as scarves, pouches, or wall hangings (like ). Some are three dimensional little figurines such as Two Left Hands, or Chocolate Beans . There are hair clips like Ginny Huber's and jewelry like 3Fun, slippers like Ingermaaike, and wrist cuffs like these by Waterrose. This person even makes lampshades out of felt!
Whether they are mixed with embroidery, knitting, or meshed with silk, the raw earthy quailty of the wool and the mashing shines through.