Where does the wool go after it is taken off the sheep?

That very much depends on a lot of different factors.

In wild sheep or domesticated self-moulting sheep, the fleece may just lie there and decompose, unless taken by another animal or bird for burrows or nests.

If the sheep is a meat sheep, the fleece is usually of very low quality. Occasionally, it can be sold as insulation material or for industrial carpeting, but it is quite often just dumped and allowed to decompose.

Better-quality fleece can be made into high-quality carpeting, upholstery and soft furnishings; clothing; or yarn for fibre arts – knitting, weaving, etc. In some countries, there is a central processing board to which all such fleece must be sold (e.g., British Wool, in the UK), in others there may be competing processers to which farmers can sell fleece.

Quora linky.

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