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Wool is an insulating substance.  It has very low heat conductivity.  It does not conduct heat easily. Woollen clothes are made of twisted strands or fibres of wool obtained from the hairs of sheep. 

The woollen clothes on our body contain small air pockets among the strands of fibre.  This property is not there in some other fibres.  The air among the wool fibres absorbs the heat from the body and retains the heat/temperature around the body.

Also, wool allows flow of air or respiration of skin.  Further, it absorbs water or sweat from the skin without being sticky to the skin. So body becomes dry. So body remains warm.

Further in summer thin layer of wool around the body prevents excess heat from outside from harming our body.  Body remains relatively cooler.  Summer or winter woollen clothing is good.

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This thing is due to the air bubbles present between the woolen sweater. As air is a bad conducter it does not allow the inside heat to go away