Entrelac is a knitting

Knitting

Knitting is a method by which thread or yarn may be turned into cloth or other fine crafts. Knitted fabric consists of consecutive rows of loops, called stitches. As each row progresses, a new loop is pulled through an existing loop. The active stitches are held on a needle until another loop can...

 technique used to create a textured diamond pattern. While the end result resembles basket-woven strips of knitted fabric, the actual material comprises interconnected squares on two different orientations.
Unlike many textured knitting techniques, Entrelac allows for colorwork as well. Though single-color entrelac is the norm, it is often used to create colored patterns. The use of variegated yarn

Yarn

Yarn is a long continuous length of interlocked fibres, suitable for use in the production of textiles, sewing, crocheting, knitting, weaving, embroidery and ropemaking. Thread is a type of yarn intended for sewing by hand or machine. Modern manufactured sewing threads may be finished with wax or...

 with long color repeats for entrelac has become commonplace, since careful use can create distinct squares of color with only one yarn.
Entrelac can be knit flat (back-and-forth) or in the round for a cylinder, as for the hat at right. However, unlike typical round knitting, the knitting is turned after a full round of squares so the next set is knitted in the opposite direction.

How it's done

Knitting entrelac requires only the knit and purl stitches, an ability to "k2tog" and "p2tog" (knit or purl two stitches together) and to pick up stitches. Entrelac can be done entirely in garter stitch although stockinette is more common.

A unique aspect of entrelac is that a "row" of knitting actually contains many smaller "rows" within the squares. Squares within a row (for instance, the first set of blue squares in the hat above) are knitted in sequence and then topped with a new row of squares (black squares in the example above).
The knitter picks up stitches along the side edge of an existing square and knits along them, knitting or purling two together as needed each time he or she reaches the live stitches along the top of the neighboring square.
Because of the picked-up stitches, the back of stockinette entrelac is generally less attractive than the front, as seen in the photo to the left.
For garments and projects requiring square edges, the entrelac is ringed in triangles, knit in the same way as the squares but with increases and decreases. A row of triangles is the typical starting point for an entrelac project, though they can also be started with connected squares, as in the scarf to the left, which was knit from side to side starting with the white row.

Entrelac fabric is often felt

Felt

Felt is a non-woven cloth that is produced by matting, condensing and pressing woollen fibres. While some types of felt are very soft, some are tough enough to form construction materials. Felt can be of any colour, and made into any shape or size....

ed to create the illusion of an intarsia

Intarsia (knitting)

Intarsia is a knitting technique used to create patterns with multiple colours. As with the woodworking technique of the same name, fields of different colours and materials appear to be inlaid in one another, but are in fact all separate pieces, fit together like a jigsaw puzzle.Unlike other...

 argyle

Argyle (pattern)

The argyle pattern is made of diamonds or lozenges. The word is sometimes used to refer to an individual diamond in the design but more commonly refers to the overall pattern. Most argyle layouts contain layers of overlapping motifs, adding a sense of three-dimensionality, movement, and texture...

pattern; the felting flattens the entrelac texture but leaves the different-colored squares, as if the object were knitted in different colors.