sloyd
n.— «Sloyd is a system of education built around the design and construction of useful handmade objects. The name is from the Swedish word, “sloyd,” which is derived from the Icelandic “slog,” meaning general skill or manual dexterity.» —“City once center of sloyd instruction” by Emanuel Parker Pasadena Star-News (California) Apr. 11, 2005. (source: Double-Tongued Dictionary)
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Actually spelled “slöjd”, and the “öj sound is not easy to pronounce for people unfamiliar with the Swedish language.
it is considered an activity that all elementary school children should engage in, and all elementary and middle schools in Sweden have special rooms, facilities, machines, etc. for this purpose. It is an activity built into the curriculum, just as physical education and music is. Some schools even have special teachers for slöjd. It includes wood carving, wood-working, knitting, weaving, sewing, and metal-working, usually involving the pre-industrial skills which were much more common several generations ago.
As the OP points out, it is primarily about useful objects. The objects can be made artistically, of course, but the emphasis is on things which serve a utilitarian purpose. An example would be baskets woven out of birch bark. People commonly used such baskets to carry wood or agricultural products in centuries past, but now they might make miniature such baskets to hang on the wall as a decoration.