This is so cool.
Every line you see below is what is called a constraint and every point is a point mass (an object with no dimension, just location and mass). All the constraints do is control the distance between each point mass. If two points move too far apart, it will pull them closer. If two points are too close together, it will push them apart. The cloth is really then just a collection of constraints and point masses in a never ending struggle.
By Andrew Hoyer