I send all my scraps that are at least 4" long and/or 1-1/2" wide to my sister, who makes the most beautiful potholders. Then, I get potholders, which I give away as gifts (after picking out the ones I like best).
For everything else, I take a yard of muslin, sew it into a bag, then put it into a trash can (like a liner). Anything smaller than what I send to my sister, including trimmings, dog ears, threads, etc., goes into the bag. When it is filled up, I sew up the end, then make a pillowcase cover with snap closures. I give these to friends who have pets, since I don't have any.