Charlie,
When fabric is woven or printed, it has 'sizing' on it to keep it moving along the loom and to keep it from getting caught in rollers - it is what makes new fabric have that stiff feel. Once you wash them, the detergent takes the sizing out and 'puffs' up the fibers - like you see with flannel.
I will get extra for fabrics I know will shrink - I've had cottons shrink as much as 4" a yard! So, now I always get an extra few inches per yard.
Regarding the pre-cut pieces, I would not wash them...I've had them work their way out of the laundry bag to vanish in that kingdom where the mates to the mismatched socks are.. . or to disintegrate into fuzz in the dryer.
I have sprayed finished squares with a light soap mixture and then rinsed, towel-dried, and then dried flat. This seems to work well.
Hope this helps. Lisa