。
She wove grass to make a basket.
Literal
She [topic-は] grass [object-を] wove-and basket [object-を] made.
編む is a productive verb meaning 'weave, knit, plait, braid' — applies to grass mats, baskets, hair, and anything woven from strands. The te-form 編んで links the two clauses sequentially: 'wove the grass, [and with that] made a basket.' 籠 ('basket') is a traditional craft item; woven baskets are a feature of Japanese rural craft and traditional packaging (think 籠盛り for fruit baskets).