Based on u/platanosinpantalon ‘s answer, but ELI5 mode:
The two materials are wieghed, and then they get mixed at the ratio that the fabric demands.
In some cases the threads are woven together, so that the flexible materials is in the center of the thread, and the cotton is spun around it.
If there is a lot of stretchy material, then the two materials are all mixed willy nilly before you make threads out of it.
Once the thread is made, they go into a t-shirt making machine and you get a cool th-shirt! With ninjas on it!
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