The French word chenille simply means a caterpillar. 'Hairy caterpillar' would be chenille poilue.
The fabric clearly gets its name from the hairy variety of caterpillar. But the name does not literally mean 'hairy caterpillar'.
Some may consider this a pedantic point; but careless wording like this can be very confusing for a quiz contestant who has only 15 seconds to come up with the correct answer.
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