The first thing that we learn about the snow in the wind is that it "gave off its own light." This creates an image of heavily falling snow, creating enough whiteness in the air to become a source of light.
This line is immediately followed by the comparison that you are asking about:
It came in thick tufts like new wool—washed before the weaver spins it.
This comparison compares two things using the word "like," which makes it a simile. An easy way to identify a simile is to look for use of the word "like" or "as." A simile is a literary device that involves comparing two things that are quite different from each other. The purpose of this is to make the image more vivid.
If we think of wool that has come off a sheep and not been spun or processed, we imagine something thick and luxuriant. Since the process of spinning is to make the wool longer and less thick, unspun wool has an idea of wildness about it. This adds to the idea of a ferocious snowstorm.
This simile is clearly one that resonates with our protagonist, Ayah, as she later remembers being a little girl and working to "pull the twigs and burrs" from wool while her grandmother and mother spun the wool and worked at the loom. The snow is therefore compared by means of a simile to something that Ayah is both comfortable and familiar with.