Why cotton and wool clothes shrink after washing them?
Wool, in particular, has very "scaly" fibers that mat together forming a dense felt. Natural oils prevent this (no shrunken sheep), but cleaned wool, agitated or shaken, shrinks due to the fibers gripping each other.

"Cotton shrinks because of the tension that is applied to its yarn and fabrics during the construction of the clothing. The tension is released by heat from the washer, dryer, steam and even sunlight, which causes the fabric to be reduced to its natural size." However, mercerization, formaldehyde and other reagents can "pre-shrink" cotton and prevent subsequent shrinkage in washing.