Fiber choice, spinning technique and finishing can all affect the finished size of a yarn.
Some fibers tend to halo because the ends of slippery fibers don't stay in the yarn but stick out around the central core. If the yarn is washed after spinning, more ends are loosened. It can also be brushed, although this is normally done with finished fabric rather than yarn. Unwanted halo can be controlled with a worsted style draft and more twist, although this also makes the finished yarn less soft. A softer yarn shows more halo but will also be more prone to shed. Mohair and angora are two common fibers that will halo. Fibers that felt well or have a distinct crimp do not normally halo.
Soft yarns of crimpy, elastic fiber tend to expand in diameter when washed. Without high twist or tension to hold it in place, the fiber crimp attempts to return to its normal shape. The fibers loosen and start to move around, single ply yarns tend to puff up into thick spots that were not there before, and multiple ply yarns become overall more soft. This is common in wool yarns: as the yarn diameter increases, the length decreases. Cotton will do this also, but the normally smaller cotton yarns do not show as dramatic a change. More twist or drying under tension reduces the effect.
Fibers that felt can be finished by fulling, a controlled felting process. Light felting starts to lock the fibers together and the yarn is still soft and lofty but shorter and more fuzzy. Heavy felting makes the yarn smaller and more firm but is difficult to control. The exact effect varies with styles of yarn, fiber and the degree of felting. Soft yarns full better than hard yarns because more fibers are able to move around. A hard twist yarn may not felt at all, even after machine washing. Heavy fulling is normally done with finished fabric. Woolen knitting yarns are sometimes lightly fulled.
Long staple, low crimp fibers tend to remain the same size after washing although wet-spun flax will lose the smooth surface and dry-spun flax can be compressed and smoothed while wet to make it smaller and more dense.
Maximum 12 points
Examiner 2 noted that angora both felts and has a halo (which I did actually mention.) That is something that isn't as clearly written as it could be.