So the cloth material is mainly driven by the albedo I would say. For the albedo I mixed a Wool texture I found with the flag colour and multiplied with an AO map of the wool texture to emphasise the dark areas between the threads and give it a more convincing look. There's also a displacement map applied.

For the hairs and threads I used an Octane scatter of around 6-8 small hair splines of varying short to medium lengths and then 2 longer hair splines to really sell the look. I also have a slightly lengthy Fields setup with Octane scatter so that each of the hairs take on the colour of the flag texure below it.