Gauge is not important, as yarn will be felted.  Follow gauge for the yarn you use.

Summary:  Short rows are used to shape balls, which are then felted and stuffed.

Materials Required: 

• Feltable yarn in two or more colors (depending on how many balls you want to make, and how many colors you want to use for each ball)
• Yarn needle
• 4 large handfuls of clean, raw wool, or wool yarn scraps, or 2 large handfuls of polyester fiberfill per ball, for stuffing

From Knitting for Baby:  The idea for these knitted balls came from a 19th-century knitting book. ... We also like to put small cat bell toys or rattles in our balls as long as there is no chance of the balls being torn open.  If that happens, the loose bell could become a choking hazard.