Toad and Toadette were in Yoshi's Woolly World, where everything is woolly around here. They were gathering the balls of yarn that Woolly Yoshi used to grab, with them spinning them around so the wool wouldn't turn into thread.
"I'm glad we would enjoy a woolly good time in Craft Island." Toad said as he had to grab some more wool that Woolly Yoshi had. "But why did we decide to do this. I mean, there's no Magikoopa around to annoy us."
"I know. But it's very simple." Toadette said as she attempted to pull out a ball of wool. "When you're out of woolly Yoshis, then it's no bag full."
The two little Toads were quite comfortable living in Craft Island, so they continued to hang out, as they eventually ran out of wool. They decided to knit new ones they found out of the Toad house.