Now why would anyone purposely shrink something? Because the resulting fabric is much stronger and warmer. During the felting process, fibers mat together and create a smooth surface.
So when did people start felting wool? I'm sure it all began by accident when our wool sweaters started smelling quite awful and the laundress tried to remedy the situation on wash day with a pot of boiling water and a stick. People were already felting on purpose in the 12th century, and Ken Follett describes this process in his historical fiction book Pillars of the Earth. Creating yards of felted fabric, or boiled wool, was a hellish process for the medieval characters. Someone had to beat the fabric with a stick while the fabric was covered in boiling water.
Here's one of the purses before it was felted. Notice that while it is attractive, it's quite floppy and probably would not last long as a purse:
Here's a close up of the strap after felting. Notice how the stitches have "blurred" together:
And here's a look at the finished bag:
This is the second bag before felting:
This bag, which was made of sheep's wool and mohair, shrunk up considerably more than my other bag, which was all wool. During the drying process, I shaped it somewhat like an acorn, which I thought was fitting for the fall colors. Here's a side view:
Here's a close up of the strap after felting. Notice how the stitches have "blurred" together:
And here's a look at the finished bag:
This is the second bag before felting: