Textbook definition: Felting is the process by which wool fiber is matted into a fabric. Wool fibers have scales and are also crimped. When these fibers are wetted and softened and then rubbed together they grab each other and are permanently bound together. This happens when you put a wool sweater in a washer and agitate it -- it comes out much smaller and also denser, because the fibers have bound together.
Basically, you are going to wash your wool item - which will shrink and smoosh your fibers all together