1Wool is the dense, warm coat of sheep called fleece. The hair of sheep has unique properties that make it well suited for making textiles and yarn. It is crimped and elastic; and the amount of crimp corresponds to the fineness of the wool fibers. It might have up to 100 crimps per inch (fine Merino wool-good quality) or 10 crimps per inch like Karakul (thicker, stronger wool used to make carpets and felting).
I had always wondered why people living in desert countries wear wool clothing (just thinking of it makes me sweat!). Because of the crimp, wool fibers attach to each other so that they stay together. This makes wool fabric bulkier than other fabrics, and they hold air, which causes the fabric to retain heat. It has a very high heat coefficient, so it impedes heat transfer and acts as insulation.
Wool ignites at a higher temperature than cotton and some synthetics. This makes it highly desirable for clothing used in occupations where people are likely to be exposed to fire (firefighters). It has a lower rate of flame spread, a lower impact of combustion and does not melt or drip (it forms a char which is insulating and self-extinguishing). Also, when used in carpeting, it contributes less to toxic gases and smoke than other flooring products.
2 Wool fleece comes mainly from sheep, rabbits and goats. Merino wool (light weight and expensive) comes from the Angora goat, cashmere (light weight and expensive) from the Cashmere Goat, and Angora from Angora Rabbits. Once the wool is spun into threads (by pulling the fibers tightly together), it can be used to make textiles or yarn for knitting/crochet.
Because of their natural qualities, I use cotton yarn for bags and cotton and wool yarn for other crocheted items (eg. the colorful striped scarf below).