I keep a pile of dreadful miss-print towels for garage rags.  At a certain point, they are not even acceptable for mopping up spills because they have holes or paint on them.  Then I dye them with the leftovers from my printing colors.  I tear them into strips about two inches wide, and weave them into rag rugs.  I have a twining loom which is a simple wooden frame with a line of nails along the ends.  I wind a cotton string back and forth from the top of the frame to the bottom.  Then, I over-under-over-under along the width of the frame with the dishtowels.  It is simple, uncomplicated work.  I take the loom with me to market and weave during the down time between customers.  Some market days I can pretty much finish a whole rug.  I never plan a pattern, but I do try to keep to a color scheme.
Customers will see my project and stop by with their old towels at a later market.  Here's a photo of my current stash.   

​For your birthday, your friend sent you a dragonfly dishtowel.  It was unexpected.  She remembered not only your birthday, but the story you’d told her about the day you were out hiking and a dragonfly landed on your leg and just stayed there.  You’d always loved dragonflies after that.  
The towel she sent was lovely.  It had little bottle-green dragonflies all over it with a pure white background.  “Too good to use,” you thought to yourself after you’d unwrapped it.  You put it in that drawer in the kitchen where you keep things you can’t find a home for.  
Then, your friend was due for a visit.  You put the dishtowel on the oven door handle.  Standing back to appreciate it, you had to admit you felt as good as when you’ve just re-painted a room and got the color right.  But, remembering what happened to the cute dog-faces towel you brought back from vacation (that red wine never quite came out) you moved it to the guest room bathroom.  “Perfect,” you thought. “People will just dry off their hands with it, so it won’t get dirty. “ 
And so it became the guest bathroom towel for a long time.  Months, even.  But one day, even though you run a pretty tight ship, it got sorted to the kitchen towels.  It ended up in the drawer with the 12 other dish towels you keep in rotation.  One evening you grabbed it and wiped up the counter so some spilled liquid wouldn't splash to the floor.  You found out the extent of the damage to the towel the next time you sorted the laundry.  
You Googled how to revive towels.  You soaked it overnight in baking soda, dishwashing detergent, and white vinegar.  It helped, but didn’t bring it back to white.  You soaked it in lemon juice and hung it in the bright sunlight.  It helped too.  But that dragonfly towel did not go back into use in the guest bathroom.  It stayed in the kitchen.  You allowed it to reach its full potential as a dish towel. 
Two years later, as you were putting away the freshly laundered dish towels, you noticed that the towel drawer was too full.  You had to get rid of some.  You kept the prettiest and the newest, and even though the oldest didn’t look that great, they still had life in them.  You cut them in half (so they can’t be confused with kitchen towels anymore) and took them to the garage to be used as cleaning rags.  The dragonfly towel was among the casualties.    

Now, you could go to the store and buy one, but you didn’t have to.  Often, local businesses would give them away as advertising.  And sure, you could use them to clean up the counter and dry the dishes, but because of the handy size, you could use them for almost anything.  I know you’ve seen pictures of a Japanese drummer with a scarf tied around his head.  Or you’ve seen a photo of a bento-box wrapped up in cloth.  That’s a tenugui.  When I resumed life here in the US, I used my stash of tenugui until they were worn to threads.  I searched for something similar and found the flour-sack dishtowel. I started giving them to people as housewarming gifts.  That’s how I started my business.

In my childhood, our kitchen stove always had a terrycloth towel hanging from it which my mom changed out seasonally.  I don’t know if it was actually articulated, but you weren’t supposed to use it.  She had a drawer of towels and tablecloths which were too beautiful or precious or troublesome to iron to actually use, so they were brought out for display purposes only.  Maybe your mom has one of these drawers too.  I suspect she does because whenever I go to estate sales, I invariably find a box of lovely linens which are vintage, with creases that are permanent due to lack of use.  I think that’s a shame.  I snap up a lot of those linens and put them to use the best I can. Sometimes I make patchwork curtains or sew parts of one old dishtowel to one new towel.  I am trying to cherish them.

I always know when I’m in the house of a kindred spirit when I happen to see that they leave a dishtowel or two in different locations around the kitchen.  My cousin Terry once pulled open her towel drawer and said, “I see no reason to fold these,” which is exactly the way I feel. I got into the practice of having a very full drawer of towels, and at the end of each day, when I’m pressing ‘start’ on the dishwasher, I toss all used dishtowels in the laundry bin and set out some clean towels for the next day.  Why?  Because they can be used for everything from potholder to cleanup of that tiny splash of milk my husband never sees and swears he did not spill each morning when he pours cereal.