Fine cotton reel’s last inch (5)
I believe the answer is:
lisle
'fine cotton' is the definition.
(I've seen this before)
'reel's last inch' is the wordplay.
'last' indicates one should take the final letters.
'inch' becomes 'isle' (I've seen this before).
The final letter of 'reel' is 'l'.
'l'+'isle'='LISLE'
(Other definitions for lisle that I've seen before include "Cotton stocking thread" , "Fine smooth cotton thread for stockings" , "Pedestrianised city" , "Type of cotton yarn" , "Strong twisted cotton thread for the strange Ellis" .)