Well, since you asked, Dave....
In a sixteenth-century ship the furling process brings the clews (lower corners) of the sail up toward the center of the yard. This results in two things that are of interest to the modeler. First, the furled sail forms a bundle that's considerably fatter in the middle than at the ends of the yard. Second, a little bit each clew is left sticking out of the bundle, with the sheet and clewline (meaning, in the case of a large sail, their blocks) attached to it.
I think I may have mentioned earlier that, during this period (and apparently until pretty late in the eighteenth century) the topsails were furled by gathering them up into bundles in the middle and lashing the bundles up in front of the lower mastheads. I haven't been able to find a picture on the web that really shows this clearly, but here's a view of the replica ships at Jamestown that comes close:
http://www.xplormor.com/wp-content/uploads/galleries/post-5589/Jamestown%20Settlement%20(7).jpg
The drawings from the John Harland book, to which 1943Mike kindly linked us, also demonstrate the process.
The Discovery, in the foreground of the photo, has her one and only topsail furled in authentic fashion. The reason for that system is pretty obvious: that little yard is so small that it probably couldn't sustain the weight of men crawling out along it to furl the sail. (The footrope hadn't been invented yet.)
I've posted my own favorite trick for making furled sails (silkspan tissue painted with a mixture of white glue and acrylic paint, softened up at the last minute with water) several times in the Forum. In the unlikely event that anybody's interested, here's an excerpt from one of those earlier posts:
Ok, here goes. To discuss this topic thoroughly would require more space than anybody wants me to take up in this forum, but I'll try to write a relatively brief outline.
The first thing to do is get a clear understanding of what happens to the spars and rigging when the sails are furled. There's more to it than simply replacing the "set" sails with furled ones.
In the typical eighteenth-century square-rigged ship the only yards that are fixed in position vertically are the lower yards (i.e., the fore, main, and crossjack yards). All the others slide up and down the masts - up when the sails are set, down when the sails are furled. (The quickest way for a ship modeler to demonstrate a failure to understand rigging is to put bare yards, or yards with furled sails on them, in the raised positions.) If the sails are furled (or left off), the topsail yard should be resting on the lower cap (or nearly so), the topgallant yard on the topmast cap, and the royal yard on the collar of the topgallant stay. Lowering the yards in itself changes the appearance of the model significantly - and, to the eye of an experienced ship enthusiast, improves it.
Another error lots of modelers commit is to make the "bundles" of the furled sails too big. A real furled sail is remarkably compact - usually a bit SMALLER in diameter than the yard to which it's attached. If you stand on a pier behind a ship with furled sails, you probably won't be able to tell whether the sails are there or not.
Almost any material used for scale model sailmaking is, by definition, too thick. With furled sails, though, it's possible to compensate for that problem by reducing the sail's depth - and thus the size of the bundle.
My favorite material for furled sails is "silkspan" tissue, subjected to a special (but quite simple) treatment. Silkspan can be found in the flying model airplane department of any good hobby shop - for very reasonable prices. I find that the thinnest grade of silkspan used by the airplane builders works well for larger sails. For the smaller ones I pay a visit to the local camera store and buy a package of lens-cleaning tissue. This stuff seems to be about the same material, but finer. The drawback to it is that it only comes in small sheets.
I start out by taping a piece of tissue over some sort of frame (a small cardboard box works fine) and painting it with a mixture of water-soluble hobby paint (I like PolyScale), Elmer's white glue, and water. The color should be a pale greyish beige. (PolyScale makes a railroad color called "weathered concrete" that looks about right to my eye.) The proportions of paint to glue to water aren't critical. I generally apply the mixture with a cheap foam brush from the hardware store. The tissue will sag a bit as it gets painted, but the cardboard box will stop it from drooping back on itself and creating a useless mess.
When the painted tissue is dry it's stiff and smooth; the fuzzy original texture of the silkspan is gone. I then use a fine pencil to lay out the shape of the sail. I make that shape a trapezoid, with the long axis identical to the scale width of the sail but the depth considerably less. (Again, that ratio isn't critical, but half the scale depth would be about right.) The reason for the trapezoidal shape is that (assuming I'm working on an eighteenth- or early-nineteenth-century square sail) I want the finished bundle to be fatter in the middle than at the ends. While I'm laying it out in pencil I also lay out a narrow hem on each side. Then I cut the sail out and, using white glue again, glue a piece of fine rigging thread (the boltrope) around the edge, and fold and glue the hem over it. (The hem isn't authentic, but it strengthens the sail and will be barely detectable on the finished product.) Then, using a small needle and thread, I fasten the sail to the yard - or, if the ship dates from after about 1820, the jackstay on top of the yard. I then rig the various lines that are attached to the sail - clewlines, buntlines, leechlines, sheets, tacks, etc.
At this point the yard/sail/rigging assembly looks pretty stupid. But now comes the trick. I touch the sail with a brush that's been dampened in water. For some reason (I don't entirely understand it), the water softens up the white glue but doesn't affect the paint. The sail takes on the consistency of a thin sheet of rubber, which can be bundled up by hauling on the appropriate rigging lines and teased into authentic-looking wrinkles and creases. It takes me a while to rig the gaskets that hold it in that condition; if the sail starts drying out before I'm finished I dab on a little more water.
When the water evaporates, the sail is remarkably stiff and durable. I have a couple models whose sails I rigged this way more than twenty years ago, and they look good as new.
I find it much easier to do all this off the model. I generally clamp a piece of wood dowel in a vise on my bench and secure the yard temporarily to that. When the furled sail has dried out I transfer the yard to the model and secure the ends of all the rigging lines appropriately.
That's the short version. I suspect nobody wants the long one. Hope this helps.
I think that method would work beautifully on a kit like yours. On the other hand, your spritsail looks like a success as it is. But remember that the clewlines and sheets would be rigged whenever the sail was on the yard - furled or unfurled. They're numbered 8 and 10 in the German drawing you posted earlier. Note that the clewline goes through a block on the yard. The block is at the point to which the clew of the sail would be hauled up.
Hope that helps a little. That model is shaping up superbly.