I can think of 2 ways you can approach it if you are wanting to physically model the individual strands like in that thread.
1 - Particle system on a proxy mesh
This is similar to you make chainmail you use a mesh similar to the wool pattern loops as hairs. It won't be a full actual strand like in the thread but it could look good
2 - Deform the wool geo through mesh deform modifier
This may be confusing to explain but I will try.
The idea would be to model your wool geo in the shape of the individual pieces of the sweater/hat/whatever you are making. For a sweater there would be a piece for the front and the back of the chest and the sleeves each with a front and a back half cylinder. Think of the shape you would cut out of cloth if you were sewing an actual shirt.
Then you would also model those shapes as a flat plane mode with good topology.
On the flat planes you will use cloth sim and sewing springs to sew the pieces together around your character. This is basically the same thing as marvelous designer and how it works to model clothing.
Now to transfer that shape to the wool geo you will add a solidify modifier after the cloth sim modifier. You make it so the solid geo encompasses the wool geo and you just created a mesh deform cage for your wool. Now you can bind the wool to your mesh deform object and it will follow along the sim and take the shape of your sweater/etc.
You would then probably have to use proportional editing to fix any intersections and line up the seams of the different pieces so it looks like they are weaved together.