In the toy industry, it's a kind of felt-like material applied over plastic to resemble fur. Composed mainly of wool or cotton fibers, it's not plushy in nature, like rooted hair tends to appear sometimes.

I used to own a couple of WB cartoon figures of guys like Bugs, Daffy, Sylvester, and Wile E. that were made like that. If the quality of the material used is poor, flocked toys may wear out easily leaving "balding" spots, but this is rare in action figures where it is rarely used nowadays.

A "hairier" variation of this material was used for the fuzzy headed/bearded G.I. Joe Adventure Team figures of the 1970's and both versions of Moss Man in the original and 2002 Masters of the Universe lines.