Wool squares cut up, sewn up, and felted. Simple and easy, no? Make it as big or little as you want--pillow, throw, queen-sized bed cover. I don't think they used scraps, but I love this idea for dealing with scraps. Other shapes would be fun to work together, as well--but now I'm just complicating things.
Awesome DIY Inspiration: Sew a whale toy from denim jeans