For the song, see Hi-Ho Hankie (song).
The Hi-Ho Hankie is a white cloth that's used to clean up messes instantly. Sneezy has one, and in "Grim the Dragon" he loans one to Queen Delightful for spilling her juice because she spotted a dragon and once again because of another one.
In the show
The hankie is made by elves in Elfy Town and according to Sneezy, they usually craft quality goods. When it's used for wiping spills or to sneeze on, it amazingly doesn't leave any stains on it. In "Grim the Dragon", Hildy (as Little Bo Peep) also borrowed Sneezy's to blow her nose and it's also used as a diaper for the baby dragon.