Rags is a creation of Mokey Fraggle, as part of her plan to fool Junior Gorg. It is a rag doll that resembles Mokey, causing the other Fraggles to mistake it for her. Although it is a rag doll, it appears to display some autonomy as Mokey sings and dances with it.
Mokey constructs Rags and despite her attachment to it, she throws into a trap set by Junior Gorg intended to catch a Fraggle. Upon discovering Rags in his Fraggle-trap, Junior Gorg is devastated, believing that the inanimate Rags is an actual Fraggle that he has inadvertently killed. Because Mokey's fellow Fraggles were not in on Mokey's plan, and because they can only see Rags from a distance, they also mistake Rags for Mokey.