|“||Bilbo found that beds had already been laid at the side of the hall, on a sort of raised platform between the pillars and the outer wall. For him there was a little mattress of straw and woollen blankets.||”|
–The Hobbit, Queer Lodgings
Note, that player respawning is changed by the mod. Follow the link for more details.
They spawn naturally in Dunland structures, Ithilien ranger hideouts, Rohan forts, Southron desert camps, Morwaith hunter shacks and occasionally in ruined Gondor towers. They can be useful while travelling, especially if you're having a hard time finding sheep or generated structures that contain wool.
It is crafted using three wheat and three of any kind of wooden planks on a normal crafting table.