When someone has sex with some inanimate object that resembles a human (i.e. doll, scarecrow.)Although it usually becuase of the term cloth refering to dolls it also refers to anything wiht a humanshape form that is of the non-existant inanimate.
"Nijia was caught having cloth sex with that damn stuffed bear again"
"The old man had sex with his raggedy ann doll more than twice in his lifetime and he was not afraid to admit it in front of the entire class for "bring-a-homeless-pe rson-to-school" day.