Yes junerose both answers are absolutely correct and I think they're great explanations! And yes, you should just cut the selvedge off rather than include it in the garment because it can shrink more than the rest of the fabric.
This site
http://vintagesewing.info/1910s/17-ad/ad-02.html has lots of information but it's somewhat old fashioned. The reason it's talking about pre-shrinking is that if you shrink a fabric properly before you make the item you want to make with it, then the fabric is pre-shrunk and won't shrink any more. Most quilting cottons would need this treatment.
The sewing editor is away so I am answering on her behalf.