This is one of Disney's Magic Towels. They are really washcloths that are pressed to look this tiny but when you open them they make an 10" square. This one has Woody, Buzz Lightyear, Rex (decked out for his Disney vacation in Mickey Ears eating a Mickey Ice Cream!), an alien, Etch-a-Sketch and the Toy Story Logo.

 

This is a Disney theme park exclusive item and cannot be found anywhere else.