To make linen, you need flax.
This does not grow directly in the initial areas, but rather a little further.
I found the first flax near the farmer's position.
This should be a good reference point so that you too can find your first flax.
Here is the exact position of the picture above, slightly enlarged so that you can find your way around better.
There you will see flax to collect directly in front of me and then again behind it.
With this you have gotten your first two flax and can use them to return to your base.
To make 1 linen you need 2x flax.
Of course you won't get very far with these two collected ones.
That's why we're building a flax farm so that you can farm more than enough flax.
Build a Flax Farm
For the flax farm you need the unlocked farmer so that you can build the seedbed there.
You don't need any unusual materials for this, and you should have already farmed them on the side.
You can also craft the Farm Soil from the farmer and all you need is dirt, which you can find everywhere as soon as you mine the ground, and some bone meal, which you can also get bones from.
In the seedbed, you can then make 10 flax seedlings from one flax and 2 water, which you can get again and again from each well.
From each of the seedlings you get 1 flax and you can process these again into 10 seedlings.
This allows you to create a very large farm from very little flax.
Once you're happy with the size of your flax farm, you can use the flax to make linen.
As mentioned, you need 2 Flax to make 1 Linen.
For this you need the hand spindle, which you get from a huntress quest.
Since you'll need linen in Enshrouded from time to time to craft the various supplies or equipment, you should always farm a good supply of it, which is practically done on the side.
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