Selvedge (n,): or “self-edge” is the edge of woven fabric finished to prevent unraveling which is achieved through a tighter, more dense weave.
Selvedge 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 selvedge.” 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 selvedge denim (approximately three yards). – Wikipedia
Selvedge Vs Non-Selvedge
Don't Confuse Selvedge Denim with Raw Denim
A common misconception is that all selvedge denim jeans are raw denim jeans and vice versa. Remember, selvedge refers to the edge on the denim and raw refers to a lack of pre-washing on the fabric. While most selvedge jeans on the market are also made with raw denim, you can find jeans that are made from selvedge fabric but have been pre-washed, too. You can also find raw denim jeans that were made in a projectile loom, and thus don't have a selvedge edge.