Clothing shrink happens when fibers absorb water/warm up and the edges of their structure (cellulose strands in cotton, protein scales in wool) stand up more and become more likely to catch on their neighbors. When they do, the fibers lose their ability to move independently from each other. As this happens, more and more fibers catch, turning the agitation in your washer and dryer into a sort of ratchet that shrinks the dimensions of the fabric.

Cotton can be un-shrunk with constant pressure. Ever had 100% cotton jeans tighten up in the wash that feel great after a day of wearing them? They shrunk and then your body undid the shrink. Wool isn’t as forgiving - the aforementioned scales clamp down on each other when they cool and dry and are effectively impossible to get free from each other. Wool can be treated before it is knit or woven into cloth to prevent shrinking and make it safe for the wash. Treated wool usually has a trade name attached to it like Superwash or something similar.