Selvage is the edge of a fabric as it comes from the loom. Selvages are woven or knit so that they will not fray, ravel, or curl.
Selvage denim refers to a unique type of selvage that is made by means of using one continuous cross-yarn (the weft), which is passed back and forth through the vertical warp beams. This is traditionally finished at both edges with a contrasting warp (most commonly red); that is why this type of denim is sometimes referred to as "red selvage." This method of weaving the selvage is possible only when using a shuttle loom.
Shuttle looms weave a narrower 30-inch fabric, which is on average half the width of modern shuttleless Sulzer looms. Consequently a longer piece of fabric is required to make a pair of jeans from selvage denim (approximately three yards).
To maximize yield, most jeans are made from wide denim and have a straight outseam that utilizes the full width of the fabric, including the edges. Selvage denim has come to be associated with premium quality jeans, which show the finished edges from the loom rather than the overlocked edges that are shown on other jeans.