Charcloth is usually some kind of cotton material which has been burnt without oxygen, in the same way as wood is turned into charcoal for the barbecue.
Charcloth is really easy to make and once you have some you have the best tinder material available for starting a fire. Charcloth will ignite with the smallest spark which makes it an excellent companion for a firesteel.
I highly recommend that you make and add either some charcloth or some petroleum jelly cotton-ball fire starters to your survival kit. In my opinion these are the best two tinder options for getting a fire started.