While holding a piece of cloth with any knife in the inventory, Right Clicking on a block will open the Cutting Menu. In this menu, Cloth and Fur can be crafted into various items. This mechanic is similar to the clay forming menu and the rock knapping menu.
Linen, Wool, Cotton, and Silk Cloth can be cut into clothing pieces, which are then sewn to produce Clothing.
Cloth and Fur can also be cut into 16 Scraps (scraps made of Fur are called Repair Scraps), which can be sewn onto damaged clothing to regain their durability.
16 scraps can be sewn back into one piece of cloth.
Burlap Cloth can be cut by Right Clicking while holding 5 or more Burlap Cloth on a block. Burlap Cloth can be cut into Burlap Sack pieces, which can be sewn into the Burlap Sack, which is used to preserve and store non-grain food.
To cut cloth, click Right Click on the ground with the cloth and with a knife in inventory. This will bring up a GUI similar to the rock knapping GUI. When the right pattern is cut out, the cloth will be consumed and the cut piece(s) will be returned.
Cloth Items
Linen, Wool, Cotton and Silk Cloth can also be used to craft Carpet, Beds, and Paintings.