Wooly nylon is thicker than regular thread and stretchy. It works well on serging knits but you can use any sewing thread to serge regular seams. The wooly is really liked for things like rolled hems because it covers much better than regular thread so you get a nicer look. I have made a lot of dancewear (think of cotton lycra, knit, tulle). I used regular thread for most seams. The only time I remember specifically choosing the wooly was when I was making napkins with rolled hems.
I hope this helps. I am by no means an expert.