I've never heard of them, but am curious. I know way back when, flour used to come in big pretty bags, so dresses could be made out of them. I'm sure it's along the same idea.
I make pillowcase dresses. So cute and fun to make! I have a couple for sale now in size 3T. And of course, they can be worn with bloomers or shorts for bigger girls. They can fit up to a size 8 woman as a shirt.