How did early people discover or develop the complex process of making clothes from wool, and did this knowledge precede the domestication of sheep?

I’ll direct you to my previous answer: Do we know the first people to figure out how to make wool from sheep, and how did they do it? and specifically this part:

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… We now have the technology (sewing needles), but how do we get thread from wool?

Boredom.

I believe the next stage is a quantum leap from puffs of shed wool to thread, by means of boredom. Tending sheep is a dull business, even with plenty of Neolithic predators about. It’s hours, days, weeks of sitting around watching the woolly buggers eat, baa, and occasionally boink. I think some bored shepherd boy, or probably many bored shepherd boys and girls of all ages, in different places over thousands of years, got in the habit of picking up a piece of shed wool and twiddling with it. In the course of twiddling, they accidentally pulled some strands of wool together and twisted it – and, as wool tends to do, those strands stayed together, and just kept on coming, until the bundle of shed wool disappeared. I’ve done this with a ball of cotton wool while sitting bored in an A&E, waiting for an X-ray. It can be done with little to no attention or intention.

So now we have wool thread. It gets used for sewing. Then, someone has the bright idea of weaving with wool thread. And this happened between 6,000 and 3,500 years ago…

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Did this knowledge precede the domestication of sheep?

In my previous answer, I assumed that this happened after sheep were domesticated. I based this on three facts:

1. sewing seems to have been invented 50,000 years ago (and therefore thread),
2. sheep were domesticated between 9,000 and 11,000 years ago – probably for meat, milk and skins, and
3. weaving is at least 6,000 years old.

(Knitting is a comparative late-comer, appearing only 1,000 years ago, give or take a few centuries – using cotton rather than wool).

However, there’s no reason why nomadic hunter-gatherers could not have picked up bits of shed winter undercoat (wool) and twiddled with them as they followed flocks of sheep across the mountains. But I doubt it went any further than that before domestication.

So, I think domestication came first, followed by breeding sheep to produce more of this rather useful winter undercoat – initially for felting, and then for thread, weaving, and finally knitting.

Quora linky.