A towel is something used to absorb liquid, usually made of paper or fabric. It should be noted here that in British English this can also be a term for a pad or sanitary napkin.
As a verb, to towel something is to use a towel to clear it of liquid. It is almost always used in the phrases towel dry or towel off. Inside the United States, the conjugations are spelled towels, toweled, and toweling. Outside the United States they are spelled towels, towelled, and towelling.
Be aware that the verb towel has another slang meaning. It is usually used with the preposition up. To towel up someone means to beat up him or her badly. It can be used either literally as a physical beating or figuratively as in a sporting match. This slang is more common outside the United States, especially in and around Australia.
Fasten six of IKEA’s outdoor floor decking tiles together into a rectangle, shear off the nobs along the edges, and you’ve got yourself a nice new place to towel off when you step out of the shower. [Huffington Post]
“It was really hard out there,” said Taylor Knox, toweling dry after winning the heat against his good friend Mick Fanning. [ESPN]
After 30 minutes of massage I’m towelled off, mummified in blankets and left for dead with a glass of tea. [Belfast Telegraph]
The diminutive Betts towelled up the bigger Tom Jonas to kick Adelaide’s first two goals and then bob up to keep them in touch through the night. [The Australian]