So, I've actually had this lore for her sitting around for a long time. Figured I'd illustrate the current version.
At first, merely a formless presence, something analogous to a soul. Mentally, I've been referring to it as her "Spark of Life." She has no idea where it came from. It just started existing one day.
Eventually, after an unknown amount of time, this spark reached out and tried to find a medium with which to meet the rest of the world. It found thread.
It tried making itself a form. First a tangled mess, then vaguely attempting to shape it like a person.
No real progress was made until it developed the patience to teach itself how to weave fabric by hand. But even that left it as little more than a sheet ghost. But with time...

With enough time and work, she would be able to make herself a body she truly wanted.
(And yes, she made the tag too. She added it after one too many surprise visits to the washing machine.)

Funnily enough, this means she's a plush who knows fabric arts. She repair and modify herself nearly however she likes so long as she has the time and resources. It doesn't even hurt. Plushies don't feel pain, after all.