Peter,
I remember my mother coming home with loops of woolen yarn which we had to hold in front of her so she could wind it into a ball. When knitting a sweater, socks or a scarf, she always worked with a ball of wool not the loops of yarn. So I guess when the fiber is "spun" into yarn, it ends up in the loop that then needs to be wound into a ball for knitting or weaving.
Asher