Wool is used to craft bed, carpet and you can also use it for decoration.
To make a Wool, you just need Spider Strings. Please follow the following steps to make a Wool.
In order to make wool, the required item that you need to get is spider strings. You can find spiders in caves or in fields at night time, kill them using your iron sword to get at least four strings.
After getting four strings, now you need to use the crafting table. Make your way to the crafting table and add strings in four adjacent cells of 3*3 crafting grid, as shown in the image below. You will get wool in the right-side box of the crafting table. Add this wool in your “ready to use” stock.