A Needle is an item used along with thread to create armour out of either leather or dragon leather through the Crafting skill. It can be bought in crafting stores, such as Dommik's Crafting Store in Al Kharid. They can also be bought from Moon Clan Fine Clothes on Lunar Isle, the Canifis General Store and Fancy Clothes Store in Varrock (Members).
Needles can be found by searching haystacks or hay bales, digging in the Digsite, as well as shops and tool stores. This is a reference to the idiom "needle in a haystack", which is defined as: "Something that is difficult or impossible to locate; something impossibly complex or intractable."
Needles are stackable items, presumably because they are small, although normal usage does not require them to be.
During the Elemental Workshop I quest, a needle can be found by searching the crate in the fenced area of the room west of the central room.