I been wanting to try this project, it was in a Country Living magazine a few months ago. I'm sorry I don't have a link to it, but I will tell you what I have done.
I went to a thrift store and found this old sweater. I personally don't care to wear this particular sweater but I like the patch-work look.
First get a wool sweater and wash it hot water with detergent in the washing machine on a normal cycle. Then dry it in the dryer. That's it. Depending on the sweater you might have to rewash it several times. This will transform the wool into felt.
In the magazine they had instructions for a different style of bag. I did not care for that one so I did my own thing.
After the sweater became felt, the whole process of making this bag was fun! When I made the first cut with my scissors, it did not flay. I succeeded in making felt! I had no plan on how to make this, I just kind of went with the flow. I would love to make more wool felt but it was hard to find 100% wool sweater at the local thrift stores. I have to say, my curiosity was satisfied.