It's a woolly toy, dad, and stuffed (5)
I believe the answer is:
panda
'it's a woolly toy' is the definition.
I can't tell whether this definition defines the answer.
'dad and stuffed' is the wordplay.
'dad' becomes 'pa' (both can mean one's father).
'stuffed' means one lot of letters goes inside another.
'pa' enclosing 'and' is 'PANDA'.
Can you help me to learn more?
(Other definitions for panda that I've seen before include "Large black-and-white herbivorous mammal" , "Racoon-like animal" , "Bamboo-eating creature" , "Endangered creature" , "WWF symbol" .)