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Step-by-step build — 4 steps. Also available as a print sheet.
Build two identical-looking rectangular frames from legs, top rail, and stretchers — one uses the outer (wider) stretchers, the other the inner (narrower) ones, so the frames nest together when folded. Predrill and countersink for 2" screws, glue every joint, and keep the top rail overhanging 1/2" past the legs on each end.
Drill the 1/4" pivot hole through both legs of each frame now, at the same height on both, before you go further — it's much easier to line up on a flat frame than after everything is 3D.
Lay the narrower frame inside the wider one so the predrilled pivot holes line up, then run a bolt through with a washer against each side of the joint and a nut on the end, finger-tight enough to pivot freely but not sloppy. Do this on both sides. This single bolt on each side is the entire folding hinge — it should swing smoothly with no binding.
Cut and hem a piece of canvas to the width of the top rails plus a few inches of wrap allowance, and sew a pocket at each end sized to slide over a dowel. The sling needs to fit snug enough that, once installed, it pulls the two frames taut against each other when you sit — a loose sling won't hold the stool open.
Slide the outer dowel through its sling pocket and set it into the outer frame, then the inner dowel into the inner frame the same way. Once both dowels are seated, the sling holds the whole X-frame under tension — the dowels stay hidden underneath the fabric.
Sand and finish the wood before this step if you haven't already; there's no going back once the sling is on.