This one is with huge help from my sister, also a world traveler with over 100 countries under her belt.
Men, lets talk to you first.
Long distance travel, a few weeks or months or more, somewhere in your luggage you are saying to yourself I need a towel. It will probably be miniscule, right?
It will be one of those travel towels, most likely some kind of microfiber, correct?
If you haven't traveled with one of those before they have a dirty little secret, some of them after a few uses will smell bad, real bad and once they do you will seriously struggle to make it smell fresh. Even if you literally wash it in boiling water, they still can stink. and because you bought one so small it really can't be used for anything else?
The key to reducing luggage weight and size is to carry things that aren't one trick ponies
As an alternative consider a sarong. WTF I hear you say, well hear me out.
For a male traveler what can a sarong do?
Light weight towel
Something to carry your laundry in
A work mat when you fix your motorcycle
An impromptu shade, day or night
A sheet to cover that sketchy bed in the undesirable hostel you had no choice to stay in
Bathrobe or dressing gown
To create a little privacy
A makeshift pillow with a few clothes added inside
Possibly a arm sling for first aid
Ladies can add a few more options
Belt or scarf
Cover for when you are in that country that requires your head to be covered in temples
Backless halter top or dress
There is not really any other piece that you could carry that is anywhere near as versitile, pack as small, sometimes smaller than a can of soda. Wash easily, dry quickly and has very little weight. Look for ones made of Rayon that are known for durability and also lightweight, a lot cheaper than the cotton or silk alternatives. and easily replaceable in many countries worldwide
Besides what is listed above did I miss anything?
An example below, for those of you not familiar