Mil-spec is because sub-standard equipment has been known to be sold to the military, by profiteers. Go back to the early days of our country, and it was real bad.
So yes, these are the minimum spec the govt will accept.
Towels are small. Yup.
I was on a sub. Didn't have much space for stuff. The bath towel I use now (civilian) would have meant I would have thrown out stuff from my locker. (locker is a misnomer. 6 ft x 3ft x 4 inches I think was the dimension.
Different items might have different requirements for how "good" it is.
The nuclear equipment we used was among the best.
A towel, well, easier to replace, won't cause nuclear meltdown.