The orginal reason for bed sheets and bed spreads was to keep those quilts clean. Quilts were seldom washd, but the linens protected the quilts and mattresses. I have an old old housekeeping book cc 1830 that discusses such ideas as emptying the linen closet every spring, hanging the quilts in the sunshine, boiling the linens. Even in the 1950's, the directions for washing blankets were quite involved, and happened very seldom. In cases of contagious disease, bedcoverings were often burned, because cleaning was so cumbersome and actually mostly ineffective.
All of this, including the idea that paper was indeed often made from rags, and often indeed used for batting and insulation.