Flax now grows in the wild. Look for knee-high patches of little blue flowers and pick them by hand (Foraging 1, no tool needed) for flax: spin it into bowstrings, weave it into linen for wraps, gloves and pack upgrades.
Close to home: just east of the Hearthmoor farm fields, west of the farms beyond the west barn, north-east of the windmill, on the west bank of the Silverrun east of town, and beside Mere Brook south of Mirror Lake.
Further out: north of the Thistledown farmstead, on the Silverrun south of Silverford, on the west shore of Lake Sael and in the meadow west of Lampwatch.
Each field has a dozen or more patches, so several players can pick at once. A picked patch is cut to stubble and grows back in about 15 seconds.
Changed
Lenore Stitch and the A Stitch in Time quest now tell you where flax grows (the general store still sells it).
Lanternvine, Cliffsage, Sunspur, Skybell, Rimeleaf and Cinderlily patches now show as plants instead of plain crates.