Crafting material, such as yarn, thread or beads may be classified according to several parameters, among which colour is probably the most important.
The need for a unified color space is obvious in videogame crafting but there is a variety of situations when a color space comes in handy, both in handicraft and in machine crafting:
When you use commercial crafting software such as an embroidery viewer or converter, you can inspect the thread palette, and will find RGB value assigned to each thread, which is used to simulate the thread color on screen. But those RGB values will vary between each software.
One reason is, that that RGB is not a standardized color system. Depending on actual wavelengths used for Red, Green and Blue-components you will obtain different values for each component. Therefore it has to be made clear, which RGB standard is used (such as sRGB or adobeRGB).
Some thread manufacturers such as Madeira provide Pantone colors for each thread. While Pantone colors are a well established reference in the commercial world, they are not freely accessible, and they are not really a color system but a paint system.
The pantone system is a pigment cookbook, that contains recipees to mix printing colors from up to 15 chemical components. The surface characteristics of the pantone patches may result in different reflectivity spectra: while matte colors produce uniform diffuse reflection, metallic colors feature a specific specular reflection spectrum.
The pantone system may be useful to capture the shinyness of a thread and could represent visible colors that are outside the scope of what can be represented inside the gamut of three color component systems like RGB and CMYK.
The most sensible color space for color standardization would probably be the standardized L*a*b color space. Pantone is very restrictive about making the actual Lab values of their colors accessible, claiming that their color numbers are protected by proprietary rights.