The felt you are using is most likely poly and not cotton and it also melts with intense heat ... like a hot pan or an iron.
For coasters, it does not soak up condensation like warm and natural. However, your cotton top would help with that.
I use it a lot for the backing on Christmas ornaments, certain wall hangings, especially once-a-year Christmas items, drawer lining, bottoms of boxes, lamps, hunting racks and so much more.
Good luck!