As a cosmetology student, I had to learn about the hair follicle and its connection to the dermal papilla. The root of the hair is enclosed in a follicle. From the follicle’s base, the dermal papilla receives food from the bloodstream and carries it forth to make new hair.
The dermal papilla has male hormone and androgen receptors. Androgens control hair growth, and they can cause the follicle to shrink and the hair to thin, if the person is genetically predisposed to hair loss.
So, dermal papillae pretty much are the hair’s control center. They tell it when to grow and when to thin out.