Alpacas are native to South America, specifically the Andes. Their close cousins include the llama (which are a bit larger,) the vicuna and guanaco (both smaller.) Alpacas (and llamas) were domesticated long ago by the Andean natives. They can be shorn and the fiber processed in a similar manner as wool is. Natural colors range from ivory white to natural black, as well as many shades of brown. They are bigger than sheep -- the top of their head is going to be about shoulder-high on a medium-sized person.
I bet they are edible, too, but you don't hear much about that.
|Undyed alpaca yarn by Cascade Yarns|
What's the down side? In my experience, it pills pretty fiercely, probably because of that fuzziness. You spend $80 on the yarn, a hundred hours knitting the sweater, and by the time you've worn it a few hours it's covered in pills under the arms and on the sleeves where they rub against each other. Frustrating.
So if you put alpaca on your royalty, count on some chambermaid spending time shaving off the pills...
However, bear in mind that (European) royalty in our world were not wearing alpaca. The Spanish brought it back from Peru, but it didn't catch on as a fiber until much later. Apparently weaving with straight alpaca doesn't work so well and it took a while to figure out what to blend it with.
Alpacas are raised in many parts of the USA, these days, and if you look online you might find a ranch near you. You will not believe how soft these critters are until you pet one. And with that long neck, they're just... fascinating. In general, they're mild-mannered and make all kinds of interesting noises. They'd make an intriguing replacement for sheep and maybe small beasts of burden in a fantasy world, I think. I'd be curious to hear what you come up with!