Yarn refers to a twisted strand of fibers which can be used for knitting or weaving. This is usually made by interlocking the fibers so that they can easily be used for knitting, fabrics and weaving. Yarn is made using different kinds of materials such as animal fleece, cotton, etc.
The process usually adopted for making this type of clothing material is known as spinning. The twisting or spinning pattern will determine the nature i.e. the texture and the quality of the clothing material that will be produced. On the other hand, wool simply means the hair of the sheep and other animals, commonly known as animal fleece.
Any clothing material made using animal fleece is wool. Since yarn can also be made using animal fleece, this makes wool to be a type of yarn. Although both are produced with the same process i.e. spinning, yarn can still be made using a process known as bonding.