Now it seems like every company that makes socks now has a wool offering at price points from big box to boutique, but in 1995 when DeFeet introduced the first version of the Woolie pretty much all that was available were itchy army surplus socks from WWII or Italian dress socks (not exactly the type of thing that is going to match your cycling kit.) DeFeet figured out that depending on the type of wool they used and how it was blended they could make a sock that gave you the quick drying, insulation and odor resistance of those itchy socks of old, but without the itch. On top of that, they added the ability to machine wash them with out them shrinking into something only an infant could wear.
The current version of the Woolie Boolie isn't a 20 something year old product that hasn''t been updated and in 2013 DeFeet moved to sourcing all of their wool from the USA. You can find out more about DeFeet''s wool sourcing program here.
The knee high version gives additional coverage for cold weather activities such as fatbiking, skiing and running.