Broadly speaking, all nappies work the same way: they contain poo, absorb wee, and protect clothing from both wee and poo. In cloth nappies the containment is done either with elastic or rolling the nappy fabric around the legs. The absorbent part is usually cotton, bamboo, microfibre, or hemp. And the protective outer would usually be either polyurethane laminate (pul), wool, or fleece.
An excellent resource for cloth nappy information is the UK Nappy Network, they have a detailed Glossary of Terms and an excellent Fitting Guide. As an affiliated nappy library we adhere to the Washing Guide, and require that all clients wash our hired nappies in accordance with the guidelines.