Bath towels are used to dry the player when the wet moodle is displayed, which is typical after being in the rain. Depending on how wet the player is determines whether a single bath towel will suffice in drying them. If not, the bath towel will become a wet bath towel.
A wet bath towel will gradually dry on its own, similarly to a cooldown in other RPG style games, upon which it will become a standard bath towel again.
A bath towel can be used with bleach to clean blood splatters off of floors and walls.
Bath towels can be found in bathrooms, hairdressers, motel rooms and gift stores.
Wet Bath Towel
From newitems.txt (Project Zomboid directory/media/scripts/)