It’s a tow-rag - a rag made of tow

[FadedRed]

Nothing to do with one’s tarsal bones.

noun: tow
the coarse and broken part of flax or hemp prepared for spinning.
a bundle of untwisted natural or man-made fibres.

It’s tow not toe

No, it's a rag worn round the foot. It's toe rag.

www.spectator.co.uk/2014/07/dot-wordsworth-origins-of-the-toe-rag/

I was first told, years ago, it was a reference to the ‘waste’ produced in the spinning industry, that was like coarse ‘fluffy-textured’ material then used for cleaning because it could then be disposed of.
There was a very ancient nursing joke about the patient who was told to “use his tow/toe” to wipe his arse after using the bedpan, because this ‘tow’ was used in hospitals for ‘dirty’ cleaning jobs (we’re talking pre-NHS here). So it referee to something of very little worth or value.
It’s interesting to see the other possible derivation. I remember being surprised to see that some countries soldier’s use a folded piece of cloth to wrap the feet under army boots, and not socks. So that would make sense too.